1. INTRODUCTION
Plaintiffs
II. BACKGROUND
Seagate manufactures and distributes hard drives. 2d Consolidated Am.. Compl. (“SCAC,” dkt. 62) ¶ 25.
The nine named plaintiffs
Plaintiffs assert claims for breach of express and implied warranty (Claims 4 through 7), violation of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act and the consumer protection statutes of the eight other states of the named plaintiffs’ citizenship (Claims 1 through 3 and 8 through 15), and unjust enrichment (Claim 16).
III. ANALYSIS
A. Legal Standard
A complaint may be dismissed for failure to stаte a claim on which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure. “The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint.” N. Star Int’l v. Ariz. Corp. Comm’n,
In ruling on a motion to dismiss under Rule 12(b)(6), the court analyzes the complaint and takes “all allegations of material fact as true and construe[s] them in the light most favorable to the non-moving party.” Parks Sch. of Bus. v. Symington,
Plaintiffs’ false advertising claims are subject to Rule 9(b) of the Federal Rules of Civil Procedure, which sets a heightened pleading standard for claims based on fraud. “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). The Ninth Circuit has held that in order to meet this standard, a “complaint must specify such facts as the times, dates, places, benefits received, and other details of the alleged fraudulent activity.” Neubronner v. Milken,
Seagate argues that Plaintiffs’ warranty claims are also subject to Rulе 9(b) because Plaintiffs allege “a unified course of fraudulent conduct.” Where a plaintiff alleges a unified course of fraudulent conduct, the claims are “said to be ‘grounded in fraud’ or to ‘sound in fraud,’ and the pleading ... as a whole must satisfy the particularity requirement of Rule 9(b).’” Kearns,
Seagate contends that Plaintiffs’ allegations do' not show any violation of its express warranty, ■ because Plaintiffs ' acknowledge that Seagate provided replacement drives as required by the terms of its warranty. See Mot. (dkt. 68) at 20. Plaintiffs do not meaningfully dispute that point, but argue instead that this- claim should proceed based on the “essential purpose” doctrine and on California’s Song-Beverly Consumer Warranty Act. See Opp’n (dkt. 72) at 20-23.
1. Seagate’s Limited Warranty
a. Allegations of Defective Replacement Drives
Seagate’s limited warranty covers “any defects in material or workmanship” in new Seagate products purchased from authorized retailers or resellers. SCAC Ex. F at 1. Under the warranty, Seagate promises to “replace” defective products “without charge with a functionally equivalent replacement product” if consumers “follow proper return procedure.” Id, Plaintiffs do not allege, that Seagate breached the warranty by failing to replace defective drives upon request. Rather, Plaintiffs allege that Seagate breached the express warranty by “replacing] defective Drives with defective Drives.” SCAC ¶¶ 341, 374. Plaintiffs’ opposition asserts that five named plaintiffs—Schechner, Hagey, Crawford, Dortsch, and Smith—received replacement drives that failed during the warranty period,'and two additional plaintiffs—Nelson and Hauff—received replacement drives that began to malfunctiоn (but did not fail entirely) during the warranty period. Opp’n at 20.
Under the terms of the warranty, a replacement drive must only be “functionally equivalent” to the original product. Id. Ex. F at.' 1. Plaintiffs do not plausibly allege that replacement drives were more prone to failure than retail drives.
b. Failure to Provide Replacement Drives
Plaintiffs’ express warranty claims, as currently alleged, are based on Sea-gate’s failure to deliver “conforming, non-defеctive Drives to Plaintiffs and Class Members despite sending replacement Drives to them.” SCAC ¶¶338, 371 (emphasis added). The Second Consolidated Amended Complaint does not put Seagate
In footnotes, Plaintiffs nevertheless contend that Seagate refused requests for second replacements from two named Plaintiffs, Dudley Lane Dortch and Dennis Crawford. See Opp’n at 22 & nn.140-41. It is not clear from the complaint, however, that either Dortch or Crawford’s drive failed under warranty. Plaintiffs themselves allege that the warranty for Dortch’s replacement drive had expired before he sought a second replacement. See SCAC ¶240 (alleging that Dortch’s drives “were just outside warranty” at the time in question). As for Crawford, Plaintiffs allege that he purchased the original drive at issue from eBay, with no allegation that eBay itself or the particular eBay user who sold the drive was an authorized reseller. Id. ¶¶ 186, 198, 201; see also id. Ex. F at 1 (“Only consumers purchasing this product from an authorized Seagate retailer or reseller may obtain coverage under this limited warranty.”). The Court declines to infer from Seagate’s initial replacement of the drive that eBay was in fact an authorized reseller, nor is the Court persuaded that the failed replacement drive fell within the scopе of the warranty even if the initial drive that it replaced did not. Cf. Opp’n at 22 n.141 (advancing those arguments).
Plaintiffs therefore do not adequately allege breach of the express warranty. If Plaintiffs are aware of facts to support such a claim—e.g., if Crawford in fact purchased his initial drive from an authorized retailer and was nevertheless refused service when his replacement drive failed under warranty—Plaintiffs may amend their complaint to so allege.
2. Essential Purpose Doctrine
Rather than focusing on the express terms of Seagate’s warranty, Plaintiffs instead rely primarily on the essential purpose doctrine, described in the Uniform Commercial Code and adopted in all nine states at issue, which provides that “[w]here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided” in the code. See Cal. Com. Code § 2719; Fla. Stat. § 672.719(2); 810 Ill. Comp. Stat. 5/2-719(2); Mass. Gen. Laws ch. 106, § 2-719; N.Y. U.C.C. Law § 2-719(2); S.C. Code Ann. § 36-2-719(2); S.D. Codified Laws § 57A-2-719(2); Tenn. Code Ann. § 47-2-719(2); Tex. Bus. & Com. Code Ann. § 2.719(B). But the essential purpose doctrine only “becomes operative when a party is deprived of its contractual remedy.” Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc.,
The essential purpose of Seagate’s limited warranty is to ensure that customers are not deprived of functional drives during the warranty period—a purpose
Plaintiffs argue that “[a]s long as there is more than one opportunity to fix the nonconformity, the reasonableness of the number of attempts is a question of fact to be determined in light of the circumstances.” Opp’n at 21 (emphasis omitted). Two of the three cases that Plaintiffs cite for this proposition applied it in the context of the Song-Beverly Act, not the essential purpose doctrine. Robertson v. Fleetwood Travel Trailers of Cal., Inc.,
While there would likely be some point at which repeated failure of replacement drives would deprive consumers of the essential purpose of the warranty, the Court declines to hold, in the absence of authority, that a mere two successive failures within the warranty period—or in other words, only one unsuccessful replacement—can meet that test where a warranty both specifically contemplates replacement of defective drives and provides the same warranty coverage for replacement drives.
3. Song-Beverly Act
Nor can Plaintiffs sustain their express warranty claims through California’s Song-Beverly Consumer Warranty Act, which provides in relevant part that “if the
By its terms, the statute addresses failure to repair after a reasonable number of attempts—not failure to replace. Here, Seagate’s express warranty authorized consumers to return products in exchange for a replacement, rather than for repair. See SCAC Ex. F at 1 (“By sending product for replacement, you agree to transfer ownership of the original product to Sea-gate. Seagate will not return your original product to you”). Section 1793.2(d)(1) contemplates replacement as a remedy in the event that repair attempts fail. In this case, Seagate already promised to replace defective replacement drives under warranty, and Plaintiffs do not allege that any of them requested “service or repair” from Seagate. Nor, as discussed above, do Plaintiffs allege that Seagate failed to replace a defective drive that was under warranty upon request. Because there is no allegation that any plaintiff sought repair services, much less that Seagate failed to provide a replacement after an unsuccessful repair, the statute does not apply to Plaintiffs’ asserted claims.
Moreover, section 1793.2(d)(1) is limited to goods sold in California. See Cummins, Inc. v. Superior Court,
Finally, “[t]he reasonableness of the number of repair attempts is a question of fact to be determined in light of thе circumstances, but at a minimum there must be more than one opportunity to fix the nonconformity.” Robertson,
* * *
Plaintiffs do not adequately state a claim for breach of express warranty, whether under the terms of the warranty itself, under the essential purpose doctrine, or under the Song-Beverly Act. Seagate’s motion is therefore GRANTED as to Plaintiffs’ express warranty claims, which are DISMISSED with leave to amend if Plaintiffs can allege sufficient facts to remedy the deficiencies discussed above.
C. Implied Warranty Claims
Plaintiffs assert breach of the implied warranty under the California Commercial Code, California’s Song-Beverly Act (which provides for an implied warranty separately from the reasonable-opportunity-for-repair statute discussed above), and statutes of the eight other states of the named plaintiffs’ citizenship. See Cal, Com. Code § 2314; Cal. Civ. Code § 1792; 810 Ill. Comp. Stat. 5/2-314, 5/2A-212; Fla. Stat. § 672.314; Mass. Gen. Laws ch. 106, § 2-314; N.Y. U.C.C. Law § 2-314; S.C. Code § 36-2-314; S.D. Codified Laws § 57A-2-314; Tenn. Code § 47-2-314; Tex. Bus. & Com. Code § 2.314. Seagate
Section 2314 of the California Commercial Code provides that “a warranty that the goods shall be merchantable is implied in a contract for their sale,” which includes a warranty that “fit for the ordinary purposes for which such goods are used.” Cal. Com. Code § 2314. Seagate challenges Plaintiffs’ claim under this statute solely on the basis of a lack of privity—Seagate does not, for example, contest the sufficiency of Plaintiffs’ allegations that the drives at issue fall below the standard of merchantability. See Mot. at 22-23; Reply (dkt. 77) at 13-14. “The general rule is that privity of contract is required in an action for breach of either express or implied warranty and that there is no privity between the original seller and a subsequent purchaser who is in no way a party to the original sale.” Burr v. Sherwin Williams Co.,
The parties dispute whether the third-party beneficiary exception is viable in the consumer warranty context. Seagate argues that “ ‘[n]o reported California decision has held that the purchaser of a consumer product may dodge the privity rule by asserting that he or she is a third-party beneficiary of the distribution agreements linking the manufacturer to the retailer who ultimately made the sale.’” Mot. at 22-23 (quoting Xavier v. Philip Morris USA Inc.,
In Clemens, the purchaser of Dodge Neon automobile argued that “similar equities,” beyond certain specific exceptions not applicable here, supported an exception to the privity requirement for his implied warranty claim against the car manufacturer. Clemens,
Some district court decisions have held that Clemens forecloses the type of claim Plaintiffs seek to bring here. See Xavier,
Although it appears that the majority of district court decisions to consider the question have held that a consumer who purchased a product from a retailer can invoke the third party beneficiary exception to bring an implied warranty claim against the manufacturer, this Court cannot square that outcome with Clemens. In that case, the Ninth Circuit held that “an end consumer ... who buys from a retailer is not in privity with a manufacturer” and therefore cannot bring an implied warranty claim under section 2314 against the manufacturer. Clemens,
D. Consumer Protection Claims
The FAL prohibits the use of “untrue or misleading” statements in advertising. Cal. Bus. & Prof. Code § 17500. The CLRA prohibits “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer.” Cal. Civ. Code § 1770. The UCL prohibits any “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. To state a claim based on false advertising or promotional practices, “it is necessary only to show that members of the public are likely to be deceived.” Kasky v. Nike, Inc.,
1. Affirmative Misrepresentations
Plaintiffs’ claims implicate a number of allegedly false or misleading statements. As discussed below, the Court declines to dismiss Plaintiffs’ claims based on Sea-gate’s statements as to the drives’ annualized failure rate (“AFR”) and suitability for use in RAID configurations, but dismisses Plaintiffs’ claims to the extent they are based on the other statements identified in the complaint. Plaintiffs do not sufficiently allege the falsity of Seagate’s affirmative statements as to the drives’ read error rate, suitability for NAS, or AcuTrac technology, and the Court holds that Sea-gate’s affirmative statements about the general reliability and performance of the drives are non-actionable puffery,
a. Published Annualized Failure Rate
Seagate published a “Barracuda Data Sheet,” beginning in 2011, which includes a representation that the model number ST3000DM001 drives have an “annualized failure rate (AFR)” of less than 1%. SCAC Ex. B; see also SCAC ¶¶ 72-73. Seagate argues that the published AFR data are “statistical results” that “provide no guarantee of future performance for any individual drive” and therefore not actionable. Mot. at 18. The Court disagrees with Seagate’s premise that statistical test results are inherently non-actionable. The Barracuda Data Sheet purports to describe the “Key Advantages” of the Barracudа drives, and the AFR statistic is listed under the heading for “Reliability/Data Integrity” specifications. See SCAC Ex. B. If Plaintiffs can show that the published AFR is inaccurate, Plaintiffs could plausibly prove that a reasonable consumer would be materially deceived as to the drives’ reliability.
Seagate also contends that Plaintiffs fail to allege that the published AFR is false. Mot. at 18; Reply at 11 n.8. Seagate is incorrect. The complaint in fact explicitly alleges that Seagate’s “representation that
To the extent that such an allegation alone might not be sufficient to meet the plausibility standard of Iqbal and Twom-bly, the complaint also alleges that Sea-gate’s published AFR is inconsistent with the results of independent testing by Backblaze, Inc., an online data backup company. Id. ¶ 5; see also RJN (dkt. 68-1) Ex. A (Backblaze report).
Seagate argues that the Backblaze assessment of the drives’ AFR is unreliable because Backblaze admittedly used the consumer-grade drives for commercial applications and “shucked” the external drives that it used—removing them from their protective casings. Mot. at 14. Plaintiffs allege that Backblaze considered the effects of both the storage environment •and shucking in its analysis, but concluded that the high failure rate was caused by the drives themselves. SCAC ¶¶ 105-07. The question at this stage of the case, however, is not whether the Backblaze report itself proves Seagate’s published AFR false, but whether Plaintiffs’ allegation that the AFR was false is plausible. Taking into account the allegations regarding the Backblaze report, the Court holds that Plaintiffs have sufficiently alleged that the AFR published by Seagate was inaccurate and misleading.
Seagate’s remaining arguments with respect to the published AFR are similarly unavailing. Seagate argues that “no consumer is alleged to have known of or relied upon this information before purchasing” and that “the SAC does not allege that a ‘reasonable consumer’ would find the Barracuda specifications to be misleading.” Mot. at 18. But the complaint alleges that several named plaintiffs read the AFR data before purchase, relied on the infor•mation as material, and would not have purchased their drives if they had known that drives had a higher AFR. See SCAC ¶¶ 153-54, 161, 178-79, 185, 192-93, 202, 227-29, 231. Moreover, Plaintiffs specifically allege that a “reasonable consumer would consider these statistics material because they measure the reliability and longevity of the Drives, which are extremely important qualities of hard drives.” Id. ¶ 79. Such allegations are sufficient at the pleading stage. Seagate also argues that Plaintiffs’ AFR claims must fail because Seagate’s AFR statistic does not include failures because of misuse, and Plaintiffs have not alleged that they “use the drives consistent with manufacturer specifications.” Mot. at 18. It is not clear how Plaintiffs’ later use of the drives is relevant to Plaintiffs’ claim that Seagate engaged in false advertising, but in any case, Plaintiffs do in fact allege that they used the drives “in a manner consistent with
b. Published Read Error Rate
In the same Barracuda: Data Sheet containing the published AFR, Sea-gate published statistics showing that maximum “Nonrecoverable Read Errors per Bits Read” for the model number ST3000DM001 drives is “1 per 10E14,” which means that for every 100 trillion bits of data read, the drives fail to recover 1 bit of requested data. SCAC ¶¶ 72-75 & Ex. B. Plaintiffs allege in a conclusory fashion that the published read error rate, among other representations by 'Seagate, was “false, misleading, and ha[d] a tendency to deceive.” Id. ¶ 81. But under Rule 9(b), Plaintiffs must plead the falsity of affirmative representations with specificity, and the complaint contains no such allegations with respect to the read error rate. Plaintiffs do not claim that the Backblaze reports' analyze anything other than the AFR, and plaintiffs identify no other source of information as to the “true” read error rate for the drives. While some individual plaintiffs’ experiences could perhaps relate to read error rates—see, e.g., id. 1Í144 (alleging that “a large number of data sectors suddenly failed with little or no warning” on Nelson’s drive); id. ¶¶ 159-60 (alleging that Hauffs’ drives experienced “bad sectors”)—the complaint does not include sufficient information to understand how those incidents relate to the read error rate, or whether it would be reasonable to extrapolate that Seagate’s representations of this metric were false based on Plaintiffs’ anecdоtal experiences. Plaintiffs’ misrepresentation claims based on the read error rate are therefore DISMISSED with leave to amend.
c. NAS and RAID Representations
In the Barracuda Data Sheet and other publications, Seagate describes the Barracuda drives as “designed for,” “perfect” for and “best-fit” for use in NAS and Desktop RAID configurations. SCAC ¶¶ 59, 60, 61, 63, 112. A Network Attached Storage (“NAS”) device is a computer appliance consisting of hardware such as a motherboard, a CPU, and memory, and at least one hard drive in an enclosure. Id. ¶ 37. A NAS device is often used for storing and sharing files across a computer network. Id. ¶ 36. A Redundant Array of Independent Disks (“RAID”)' configuration is a data storage technology that combines multiple hard drives in a single unit for the purposes of data redundancy, performance improvement, or both. Id. ¶ 39. RAID systems can be configured in several “levels,” and the most common levels for .home units are RAID 0, RAID 1, and RAID 5. Id. ¶ 39. RAID 0 does not provide any data redundancy but typically increases storage space and data read/write speeds. Id. ¶ 41. RAID 1 is used for data redundancy and typically involves two hard drives storing duplicate data. Id. ¶42. RAID 5 utilizes three or more hard drives, and a percentage of each hard drive, together equaling the storage space of one drive, is set aside for redundancy purposes. Id. ¶ 43. A RAID 5 configuration can withstand the failure of one hard drive, but if two drives fail within a short span of one. another, data may be lost. Id. An NAS system can include a RAID configuration such that the server backs up its own data using data redundancy. Id. ¶ 44.
Plaintiffs allege that Seagate described the Barracuda drives in a 2011 press release as “designed for desktop, tower or all-in-one personal computers; workstations, home and small business servers; network-attached storage devices; direct-attached storage expansion; and
Seagate contends that the RAID statements cannot be considered false or misleading as a matter of law because Seagate has never claimed that the Barracuda drives are suitable for all RAID configurations. Mot. at 18-19. But California’s consumer protection statutes “‘prohibit not only advertising which is false, but also advertising which, although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.’ ” Williams,
Seagate also argues that these claims fail because Plaintiffs fail to allege that any named plaintiffs suffered harmed as a result of these particular representations. Not all named plaintiffs allege that they suffered injury as a result of Seagate’s NAS and RAID statements, but plaintiffs Chadwick Hauff, Dennis Crawford, Josh-uah Enders, Dudley Lane Dortch IV, and John Smith specifically allege that they relied on Seagate’s RAID statements and would not have purchased the drives if they had known the truth. SCAC ¶¶ 153, 156-57, 192-193, 202; 227, 229, 231, 236-37, 242, 247, 251. Plaintiffs have therefore adequately alleged that they suffered injury as a result of the statements. See Kwikset Corp. v. Superior Court,
As for NAS, however, Plaintiffs present no specific faсtual allegations showing that the drives are unsuitable for use in NAS applications, except to the extent that an NAS device might be configured to use RAID 5. Although NAS
d. AcuTrac Technology Representations
The complaint recounts several of Seagate’s statements describing its AcuT-rac technology and its effect on the “read/ write” performance of the drives:
• “Seagate AcuTracTM technology enables new storage densities with accurate reading and writing to nano-sized tracks that are only 75 nanometers wide! That’s about 500 times smaller than the period at the end of this sentence.”
• “Seagate engineers had to pack 340,-000 hard drive tracts into the width of a single inch. This means that, when reading and writing data, the read-write head needs to accurately follow a track that is a mere 75 nanometers wide. That’s about 500 times smaller than the period at the end of this sentence.”
• “Reliable pеrformance, even in tough environments, thanks to Seagate AcuTracTM servo technology.”
• Seagate AcuTrac technology “reliably and accurately [follows the Drive’s] nano-tracks even in challenging operating environments, like an all-in-one PC with the music turned up.”
• “AcuTracTM servo technology delivers dependable performance, even with hard drive track widths of only 75 nanometers.”
• “Seagate AcuTrac technology enables reliable read/write performance even in high touch operating environments.”
• “Rest easy knowing your drive delivers dependable performance with Seagate® AcuTracTM servo technology-”
See SCAC ¶¶ 51, 53, 54, 55, 58 (alteration in original). As with the published read error rate, the complaint contains no specific, plausible allegations as to the falsity of these statements. Plaintiffs do not allege, for example, that the read-write head does not “accurately follow a track that is a mere 75 nanometers wide” or that Sea-gate’s AcuTrac servo technology is not reliable in “high touch operating environments.” Plaintiffs do not connect the AcuTrac technology or the drives’ read-write performance with Backblaze’s analysis or the individual plaintiffs’ experiences, and do not identify any other source of information that would show these statements to be false. The Court therefore GRANTS Seagate’s motion with respect to claims based on these representations, and DISMISSES such claims with leave to amend.
e. Reliability and Performance Representations
Finally, Plaintiffs point to a series of Seagate’s statements that describe the reliability and performance of the drives:
• “Proven quality and performance.”
• “Barracuda has become the world’s most popular family of hard drives with consistent quality and performance-enhancing innovations and features .... ”
• “One drive with trusted performance, reliability, simplicity, and capacity.”
• “Count on Barracuda drives to deliver the storage innovations that driveyour costs down and your performance up.”
• Barracuda is “produced using the most sophisticated manufacturing process in the industry, which a focus on environmental stewardship.”
• ‘Tour digital life safe and sound.”
• “Backup Plus from Seagate is the simple, one-click way to protect and share your entire digital life—without getting in the way of the rest of your life.”
• “Backup Plus is the family of external drives from Seagate that lets you do more with photos and movies, protect everything in your digital life, and manage it all from a single intuitive dashboard.”
• “Space for everything you’ve got. No more having to pick and choose what you protect.”
• “Life is full of amazing moments you want tо remember forever. The Backup Plus desktop drive lets you set up easy automatic backups of all your stuff, so you know that even if ‘life happens’ to your computer, your memories are always protected.”
SCAC ¶¶ 55, 58, 67.
“Generalized, vague, and unspecified assertions constitute ‘mere puf-fery’ upon which a reasonable consumer could not rely, and hence are not actionable.” Anunziato v. eMachines, Inc.,
Plaintiffs argue that a state trial court considering similar claims against Seagate recently found the same statements to be actionable. See Pozar v. Seagate Tech. LLC, No. CGC-15-547787,
This court agrees with the Pozar and Lima courts that the deceptiveness of a defendant’s statements must be evaluated in context of whole advertisement. See also Williams, 552 F.3d at 939 n.3 (finding that a claim that snacks are “nutritious” contributes to the “deceptive context of the packaging as a whole” and declining to dismiss the statement as puffery). But in this case at least, Plaintiffs do not allege that the statements were made in a context that suggests a particular level of verifiable reliability or performance. Plaintiffs do not allege, for example, that the statements were made in close connection with Seagate’s published AFR statistics or any other specific reliability or performance claims. Cf. Williams, 552 F.3d at 939 & n.3 (addressing claims made on packaging that, in context, could promote an objectively false conclusion that the product was made entirely from natural ingredients).
The state trial court’s findings notwithstanding, this Court concludes that the statements are too vague, general, and subjective to be actionable. See e.g., Punian v. Gillette Co., No. 14-CV-05028-LHK,
2. Omission Claims
Under California law, an allegedly fraudulent omission is actionable only if the omission is “contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose.” Daugherty v. Am. Honda Motor Co.,
(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from thе plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts.
Tietsworth,
Plaintiffs allege that Seagate wrongfully failed to disclose the following information:
1) that the Drives are not reliable or dependable; 2) that they are plagued by a latent, model-wide defect that renders them highly prone to early catastrophic failures; 3) that they are not suitable for storing, protecting, or backing up important personal data; 4) that they are not designed for RAID 5 or suitable for any form of RAID or NAS; 5) that their published read error rates and AFRs are wholly inaccurate; and 6) that they do not last as long as comparable hard drives on the market.
SCAC ¶ 285.
In their opposition brief, Plaintiffs contend that their omissions claims arise out of Seagate’s affirmative misrepresentations. See Opp’n at 10; see also Pozar,
Viewing the complaint as a whole, and taking into account Rule 9(b)’s instruction that “knowledge ... may be alleged generally,” it is plausible that Seagate knew of and failed to disclose information contrary to those representations—e.g,, that thé published AFR was inaccurate or that the drives were'in fact -unsuitable for RAID 5 configurations. With respect -to AFR, such an inference is plausible at the pleading stage based on the allegations discussed above that the actual failure rate was much higher than published,' - and based on Seagate’s presuméd pre-market testing of its products. The-’Court’holds that publication of the allegedly false AFR gave rise to a duty to disclose information bearing on the drives’ alleged unreliability. As for RAID, Plaintiffs Specifically allege that a Seagate representative informed one of the plaintiffs that the drives at issue “are not meant for any type of-raid [sic] configuration beyond a-Desktop RAID 0 or 1,” and would be prone to failure in a RAID 5 configuration. SCAC ¶ 111. The Court finds this allegation sufficient at; the pleading stage to show Seagate’s knowledge that its drives were not suitable-.for at least one common RAID use case, and holds that Seagate’s ¡ representation, that the drives could be used for. “Desktop RAID” gave rise to a duty to disclose that limitation. See, e.g., id. Ex. B.
As' discussed above, Plaintiffs have not plausibly alleged Seagate’s representations regarding the drives’ NAS' capabilities or error read rates to be false or misleading. Similarly, Plaintiffs have not plausibly alleged that Seagate withheld any relevant information on. those subjects, The Court therefore GRANTS Seagate’s motion, as to wrongful omission claims based on those subjects, and DISMISSES such claims with leave to amend. The remaining categories of alleged wrongful omission' set forth above and at paragraph 285 of .the complaint, however, are sufficiently tied to the alleged misrepresentations regarding AFR and RAID capabilities to proceed.
3. Other Arguments for Dismissal of CLRA Claims
Seagate raises two arguments specific to Plaintiffs’ CLRA claims: (1) that such claims should be dismissed for failure to file venue affidavits; and (2) that such claims are time barred.
“In any action [under the CLRA], concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the action has been commenced in a county described in this section as a proper place for the trial of the action.” Cal. Civ. Code § 1780(d). If a plaintiff fails to file the required affidavit, “the court shall, upon its own motion or upon motion of any party, dismiss the action without prejudice.” Id. As Seagate acknowledges, however, two named plaintiffs submitted venue affidavits with their amended complaints filed before consolidation. Mot. at 28 (citing dkt. 37 in this case and dkt. 38 in case number 16-cv-00612). Seagate nevertheless contends that these claims must be dismissed because affidavits were not included with Plaintiffs’ original complaints. Reply at 14-15. Such a result would serve no purpose where the appropriate remedy would merely be dismissal with leave to amend to attach the same affidavits that were previously filed. See Cal. Civ. Code § 1780(d) (calling for dismissal without prejudice). The Court is therefore persuaded that the purpose of the rule has been satisfied and declines to dismiss any plaintiffs CLRA claim on this basis. See In re Sony Gaming Networks & Customer Data Sec. Breach Litig.,
The Court also declines to dismiss plaintiffs’ CLRA claims as time barred, except for the claim of Plaintiff John Smith, which Plaintiffs concede is barred. See Opp’n at 25 n.166. Under the discovery rule “plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation.” Fox v. Ethicon Endo-Surgery, Inc.,
4. UCL “Unlawful” Prong Claims
The unlawful prong, of the UCL “borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
5. UCL “Unfair” Prong Claims
Seagate moves to dismiss Plaintiffs’ UCL “unfair” prong claims on the grounds that they оverlap with Plaintiffs’ misrepresentation claims (which Seagate also contends should be dismissed, as discussed above), and that Plaintiffs’ claim that Sea-gate should have provided refunds or different models of hard drives contradicts the express terms of Seagate’s warranty. Mot. at 19-20 (citing SCAC ¶ 292). Plaintiffs argue that the “unfair” prong claim should proceed based on the premise that “replacing defective hard drives with defective hard drives—and charging customers exorbitant sums of money to recover their data when these drives repeatedly fail—is unscrupulous and causes injury to consumers that outweighs its benefits.” Opp’n at 19 (citing SCAC ¶¶ 126, 129, 291-93; McKell v. Wash. Mut., Inc.,
The test for the “unfair” prong of the UCL remains somewhat unsettled in the California courts. Courts previously held a practice to be “ ‘unfair’ ... when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” S. Bay Chevrolet v. Gen. Motors Acceptance Corp.,
Whеn a plaintiff who claims to have suffered injury from a direct competitor’s “unfair” act or practice invokes section 17200, the word “unfair” in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one ofthose laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.
Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
In the years since Cel-Tech, some courts have continued to use the South Bay test for' cases - brought by consumers, e.g., McKell,
■ To the extent that the California statutory claims discussed above are allowed to proceed, Plaintiffs may also proceed on UCL unfairness claims for violation for the legislatively declared policies underlying the statutes at issue. Conversely, Plaintiffs UCL unfairness claims are DISMISSED with leave to amend to the extent that they rely on theories rejected in other contexts above, because Plaintiffs have not plausibly alleged contravention of a legislative policy under Cel-Tech or substantive unfairness under South Bay. With .respect to Plaintiffs’ theory of “replacing defective hard drives with defective hard drives,” for example, Plaintiffs have not plausibly alleged that replacement hard drives were less reliable than retail drives, and the Court is not satisfied that the alleged failure of some replacement drives is in itself sufficiently “immoral, unethical, oppressive, unscrupulous or substantially injurious” to support a claim. See S. Bay,
That leaves Plaintiffs’ theory that Sea-gate’s practice of “charging customers' exorbitant sums of money to recover their data when [Seagate’s] drives repeatedly fail” is unfair within the meaning of the UCL, which does not significantly overlap with any other claim addressed’above. See Opp’n at 19; SCAC ¶ 292 (“These [unfair] acts and practices include ... charging customers exorbitant sums of money to recover their' data.”). Because Seagate has not presented any reason to dismiss claims based on this theory, the Court declines to dismiss such claims at this time.
E. Unjust Enrichment Claims
Seagate argues that Plaintiffs’ unjust enrichment claim should be dismissed as duplicative of Plaintiffs’ “claims undеr the UCL and FAL as well as the warranty claims” because it is based on the same factual allegations as Plaintiffs’ other claims. Mot. at 24. Although Plaintiffs’ unjust enrichment claim may ultimately prove to be “duplicative of or superfluous to ... other claims,” the Ninth Circuit has held that “this is not grounds for dismissal” because a .party may plead claims in the alternative. Astiana v. Hain Celestial Grp., Inc.,
IV. CONCLUSION
For the reasons discussed above, Sea-gate’s motion to dismiss is GRANTED as to: (1) Plaintiffs’ express warranty claims (including to the extent such claims are
IT IS SO ORDERED.
Notes
. Plaintiffs are Christopher Nelson, Dennis Crawford, Joshuah Enders, David Schechner, Chadwick Hauff, James Hagey, Nikolas Ma-nak, John Smith, and Dudley Lane Dortch IV.
. Although Plaintiffs have amended their complaints multiple times, Seagate’s present motion is the first motion to dismiss in this litigation. .
. This Order uses the terms "drives,” "hard drives,” or "Barracuda drives” interchangeably to refer to the various Seagate products discussed above consisting of or containing model number ST3000DM001 hard drives.
. A tenth named plaintiff voluntarily dismissed his claims. See diets. 66, 67.
. To the extent that Plaintiffs’ conclusory assertion that the refurbished drives provided as replacements were “highly likely to fail again,” see SCAC ¶ 341, could be construed suggesting that replacement drives were not ' "functionally identical” to retail drives, that assertion is not supported by sufficient factual allegations to survive scrutiny under Iqb.al and Twombly. The Court also notes that Sea-gate’s warranty expressly permits it to "replace [a returned] product with a product that was previously used, repaired and tested to meet Seagate specifications.” Id. Ex. F at 1. Plaintiffs do not plausibly allege that Seagate failed to repair and test refurbished drives as required by the warranty.
, The Second Consolidated Amended Complaint also alleges that Seagate refused a second request for replacement by former plaintiff Adam Ginsberg, whose first reрlacement drive may have failed within the warranty period. See SCAC ¶¶ 203-10. Ginsberg voluntarily dismissed his claims after the filing of the operative complaint. See dkts, 66, 67. This Order therefore does not consider allegations regarding Ginsberg’s experience.
. One case cited by Plaintiffs appears to have held that multiple attempts to have products repaired can be aggregated among several plaintiffs to establish a breach of warranty under the essential purpose doctrine. See Horvath v. LG Elecs. Mobilecomm U.S.A., Inc., No. 3:11-CV-01576-H-RBB,
. See Roberts v. Electrolux Home Products, Inc., CV12-1644,
. Seagate argues that Plaintiffs' false or misleading advertising claims under the consumer protection statutes of the eight other states fail for the same reasons. Plaintiffs note that Seagate does not specifically address Plaintiffs’ other claims in its motion, but do not identify any differences in state law that would allow a claim to proceed in the absence of an adequately alleged affirmative misrepresentation or fraudulent omission. The Court assumes for the purpose of the present Order that the other consumer protection statutes at issue are not materially different from the California statutes.
. The Court takes judicial notice of the Backblaze report as incorporated by reference by the complaint.
. Certain of these statements include more specific factual claims that might go beyond puffery, such as the assertion that Seagate drives can be used for automatic backups. Plaintiffs do not challenge the truthfulness of those elements of the statements. The analysis here focuses on Plaintiffs’ contention that Seagate’s marketing misrepresented the reliability and general performance of the drives.