Plaintiff Kenneth Sciacca brings suit individually and on behalf of various putative classes ("Plaintiff") against Defendant Apple, Inc. ("Apple"). Plaintiff asserts a multitude of claims relating to Apple Watches, which allegedly contain a defect that causes the Watches' screen to crack, shatter, or detach. Before the Court is Apple's motion to dismiss Plaintiff's amended complaint. ECF No. 35 ("Mot."). Having considered the parties' submissions, the relevant law, and the record in this case, the Court GRANTS Apple's motion to dismiss the amended complaint.
I. BACKGROUND
A. Factual Background
Apple first began to sell its Watches in April 2015, when Apple introduced its
Plaintiff, a Colorado resident, purchased his Series 2 Stainless Steel 38mm Apple Watch on or about December 1, 2016. Id. at ¶¶ 16, 47. He did so after reviewing Apple's promotional materials for Series 2 Watches, which advertised the Watch as a good compliment to sporting activities such as swimming, running, and biking. Id. at ¶ 46. However, on or about March 9, 2018, the screen on Plaintiff's Watch detached from the Watch body. Id. at ¶ 48. Plaintiff took his broken Watch to an Apple Store in Lone Tree, Colorado, where Apple Store employees informed Plaintiff that the damage was not covered by the limited warranty and that he had to pay $ 249 to repair the Watch. Id. Plaintiff declined to have his watch repaired, explaining that "[i]n the event that Plaintiff decides to have the repair done, he (as do other members of the Class) would still run the risk of future harm as the repaired Watch would also be prone to the same Defect described herein." Id. Plaintiff alleges that his experience "is identical to the experiences of thousands of Apple Watch owners." Id. at ¶ 50. Plaintiff cites consumer complaints posted on Apple's online forum to suggest that Apple had knowledge of the alleged defect. Id. at ¶ 50, 53 ("[C]onsumers' complaints at Apple Stores, to Apple Support, and online leave no doubt that Apple is fully aware of the Defect.").
Plaintiff notes that Apple provides a limited warranty for purchasers of the Watch, which covers the "product against manufacturing defects beginning on the original purchase date." Id. at ¶ 34. The warranty is one year for most models of the Watch, including the one that Plaintiff purchased. Id. Apple warrants the Watches "against defects in materials and workmanship when used normally in accordance with Apple's published guidelines." Id. at ¶ 35. The limited warranty also "disclaims all statutory and implied warranties, including without limitations, warranties of merchantability and fitness for a particular purpose...." Id. n.7 (linking to "Apple One (1) Year Limited Warranty").
B. Procedural History
On June 4, 2018, Plaintiff filed the instant suit against Apple. ECF No. 1. In response, Apple filed a first motion to dismiss. ECF No. 21. Instead of responding to Apple's motion to dismiss, Plaintiff amended his complaint on August 31, 2018. ECF No. 28. The Court denied Apple's motion to dismiss as moot on September 5, 2018. ECF No. 32.
Apple filed the instant motion to dismiss on September 28, 2018. ECF No. 35. On October 19, 2018, Plaintiff filed his opposition. ECF No. 48 ("Opp."). On November 2, 2018, Apple filed its reply. ECF No. 49 ("Reply").
II. LEGAL STANDARD
A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include "a short and plain statement of the claim showing that the pleader is entitled to relief." A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The U.S. Supreme Court has held that Rule 8(a) requires a plaintiff to plead "enough facts to state a claim to relief that is plausible on its face."
The Court, however, need not accept as true allegations contradicted by judicially noticeable facts, see Shwarz v. United States ,
B. Motion to Dismiss Under Federal Rule of Civil Procedure 9(b)
Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Bly-Magee v. California ,
"When an entire complaint ... is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint...." Vess ,
C. Motion to Dismiss under Rule 12(b)(1)
A defendant may move to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. While lack of statutory standing requires dismissal for failure to state a claim under Rule 12(b)(6), lack of Article III standing requires dismissal for want of subject matter jurisdiction under Rule 12(b)(1). See Maya v. Centex Corp. ,
D. Leave to Amend
If the Court determines that a complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend "shall be freely given when justice so requires," bearing in mind "the underlying purpose of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities." Lopez v. Smith ,
III. DISCUSSION
Plaintiff alleges 6 causes of action: unlawful business acts and practices ("UCL") in violation of
A. Choice of Law
Counts 1 (UCL), 2 (CLRA), and 5 (Magnuson-Moss Warranty Act) arise under statutory law, so there is no governing law issue with respect to those claims. However, count 3 (breach of express warranty) and count 4 (breach of the implied warranty of merchantability) are common law claims, and Plaintiff's amended complaint does not specify whether these claims are brought under California or Colorado law. Because the number and scope of the claims in the instant case are limited, and the issues regarding counts 3 and 4 are straightforward, the Court will analyze both claims under California and Colorado law. Because count 6 (unjust enrichment) is asserted only under Colorado law, Opp. at 22, the Court will analyze count 6 solely under Colorado law. The Court next addresses Apple's motion to dismiss each count in turn.
B. Counts 1 and 2-Violation of the UCL and Violation of the CLRA
First, the Court determines whether the UCL and CLRA claims are subject to the Federal Rule of Civil Procedure 9(b) heightened pleading standard. Then, the Court addresses whether Plaintiff has sufficiently identified the alleged defect to meet Rule 9(b)'s requirements. Third, the Court discusses whether Plaintiff has alleged an actionable misrepresentation. Fourth, the Court discusses whether Plaintiff's omission-based claims fail because Plaintiff has not sufficiently alleged Apple's knowledge of the defect.
1. Whether Rule 9(b) Applies
To state a UCL claim, "a plaintiff must show either an (1) unlawful, unfair, or fraudulent business act or practice, or (2) unfair, deceptive, untrue, or misleading advertising." Lippitt v. Raymond James Fin. Servs. Inc. ,
To state a claim under the CLRA, a plaintiff must show that: "(1) a consumer is exposed to an unlawful business practice, and (2) the consumer is damaged by the unlawful practice. Additionally, a CLRA claim based on fraud requires reliance." Richter v. CC-Palo Alto, Inc. ,
Federal Rule of Civil Procedure 9(b) applies a heightened pleading standard to claims sounding in fraud. Fed. R. Civ. P. 9(b). To meet the heightened pleading standard, allegations must be particular enough to allege the "who, what, when, where, and how" of the fraud. Vess ,
2. Whether Plaintiff Provides a Sufficient Identification of the Alleged Defect
Apple argues that Plaintiff has failed to identify the alleged defect with particularity. Mot. at 9. Plaintiff responds by arguing that the sufficiency of the identification of a defect arises in the context of a materiality analysis (i.e., whether the alleged defect is a material fact Apple had to disclose). Opp. at 6. Plaintiff claims that he has "adequately alleged the Defect as a fact material to a reasonable consumer." Id. at 7. The Court finds that Apple has the better argument.
"Allegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged...." Bly-Magee v. California ,
Here, Plaintiff alleges that "the screens of [purchasers'] Watches were detaching, cracking, or shattering," AC at ¶ 43, and that the defect is allegedly present in all series, models, and sizes of the Watches, id. at ¶ 44. Aside from this description of the consequences of the alleged defect, Plaintiff fails to identify what is the actual defect; namely, what is the defect that causes the screens to allegedly detach, crack, or shatter. Rather, Plaintiff merely asserts that "[t]he Watches all contain the same defect and/or flaw, which causes the screens on the Watches to crack, shatter, or detach from the body of the Watch...." Id. at ¶ 3. As Apple points out, all the amended complaint discloses is that the alleged defect "could have been the result of various possible causes, including consumer misuse." Mot. at 10. Even Plaintiff does not allege what caused his own Watch's screen to detach. AC at ¶ 48. These allegations of an alleged defect do not satisfy Rule 9(b)'s heightened pleading standard.
For instance, in Punian , the plaintiff alleged that the defendant's batteries had the "potential to fail, leak, and/or damage Plaintiff's electronics."
Here, Plaintiff's allegations are similarly vague. Plaintiff's description of the alleged defect identifies only the consequences of the alleged defect (i.e., cracking, shattering, or detaching), but is notably silent on identifying the defect that causes such consequences. Moreover, like in Punian ,
Plaintiff relies upon Punian to argue that his description of the defect is sufficient because the alleged defect is a material fact that Apple had a duty to disclose. Plaintiff argues that because he alleges that Apple's Watches "all contain the same defect and/or flaw," this is sufficient to support the materiality of the defect. Opp. at 7 (citing AC at ¶ 3). Plaintiff's argument misses the mark. The sufficiency of the identification of the alleged defect-not the materiality of the alleged defect-is at issue. Plaintiff's pleading cannot meet Rule 9(b)'s heightened pleading standard simply by alleging that all Watches contain a material defect without identifying the defect. Under Ninth Circuit law, Plaintiff must specify what causes the Apple Watch screens to detach, crack, or shatter. See, e.g. , Wilson v. Hewlett-Packard Co. ,
Additionally, Plaintiff cites to case law arguing that descriptions of a defect were sufficient to support the materiality of a defect on a motion to dismiss. See, e.g. , Philips v. Ford Motor Co. ,
Therefore, the Court finds that Plaintiff's UCL and CLRA claims fail because Plaintiff has not sufficiently identified the alleged defect.
3. Whether Plaintiff Pleads an Actionable Misrepresentation
Even if Plaintiff had sufficiently identified the alleged defect, Plaintiff's claims still fail because Plaintiff fails to plead an actionable misrepresentation or omission. Below, the Court first discusses why Plaintiff has not pleaded an actionable misrepresentation, then discusses why Apple did not have knowledge of the alleged defect such that Plaintiff has adequately pleaded an actionable omission.
Plaintiff alleges that prior to purchase, he reviewed Apple's promotional materials on Apple's website. AC at ¶ 46. The advertisements stated that the watch had a GPS, was water-resistant to 50 meters, had a dual-core processor and "a 2x brighter display."
Apple argues that Plaintiff fails to allege an actionable misrepresentation because he fails to state how the advertisements constitute false misrepresentations. Plaintiff argues that regardless of whether the statements are false, the representations were misleading because Apple had a duty to qualify its statements with facts material to the statements. The Court finds Apple's arguments more persuasive.
As aforementioned, claims sounding in fraud must allege "an account of the time, place, and specific content of the false representations...." Swartz ,
Plaintiff merely pleads that he reviewed the promotional materials on Apple's website. AC at ¶ 46. However, he fails to plead "what is false or misleading about a statement, and why it is false." GlenFed ,
In response, Plaintiff cites to GeoData Sys. Mgmt., Inc. v. Am. Pac. Plastic Fabricators, Inc. , which held that "a defendant may not suppress or conceal any facts within his knowledge which materially qualify those stated."
Moreover, GeoData is distinguishable from the instant case because in GeoData , the plaintiff alleged that the defendants' description of a patent as "our patent" was a fraudulent statement because it omitted the fact that only one of the defendants actually owned the patent.
Thus, Plaintiff has not stated an actionable misrepresentation.
4. Whether Plaintiff's Omission-Based Claims Fail for Failure to Sufficiently Allege Apple's Knowledge of the Defect
Next, the Court discusses whether Plaintiff's omission-based claims fail because Plaintiff has not sufficiently alleged Apple's knowledge of the defect. "For an omission to be actionable under the CLRA and UCL, the omission must be contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose." Elias v. Hewlett-Packard Co. ,
Plaintiff alleges that "customers' complaints at Apple Stores, to Apple Support, and online leave no doubt that Apple is fully aware of the Defect." Id. at ¶ 53. Plaintiff also alleges that "[i]n April 2017, Apple extended its Limited Warranty for its First Generation Watches to address the issue. Thus, prior to bringing the Series 1, 2 and 3 Watches to market, Apple was keenly aware of the problem with the Watches." Id. at ¶ 40. The Court addresses each allegation in turn.
First, Plaintiff's amended complaint does not identify any customer complaints at Apple Stores or to Apple Support. Second, the only online customer complaints are customer posts on Apple's website, and none of these complaints identify the alleged defect that caused any Apple Watch screen to detach, crack, or shatter. Furthermore, most of the online customer complaints, including all 5 online customer complaints before Plaintiff bought his Watch, fail to identify the model of the affected Apple Watch (i.e., Series 1, 2, or 3).
Third, Plaintiff alleges that "prior to bringing the Series 1, 2 and 3 Watches to market, Apple was keenly aware of the problem with the Watches" because Apple extended the limited warranty on its First Generation Watches to address the defect. AC at ¶ 40. However, Plaintiff's allegation does not show Apple's knowledge of the defect in the Series 1, 2, and 3 Watches because the First Generation Watches are distinct from and preceded the Series 1, 2, and 3 Watches. Plaintiff fails to explain how Apple's alleged knowledge of the alleged defect in the First Generation Watches relates to knowledge of the alleged defect in the Series 1, 2, and 3 Watches. Most importantly, Plaintiff actually excluded the First Generation Watches from the Watch models alleged to suffer from the alleged defect. AC at ¶¶ 1, 3. Thus, Plaintiff's allegation does not show Apple's knowledge of the alleged defect.
Thus, the Court GRANTS Apple's motion to dismiss the UCL and CLRA claims. Because granting Plaintiff an additional opportunity to amend the complaint would not be futile, cause undue delay, or unduly prejudice Apple, and Plaintiff has not acted in bad faith, the Court grants leave to amend. See Leadsinger, Inc. ,
C. Count 3 -Breach of Express Warranty
The Court next discusses Plaintiff's breach of express warranty claim. "A manufacturer's liability for breach of an express warranty derives from, and is measured by, the terms of that warranty." Cipollone v. Liggett Grp. ,
For the Watch model Plaintiff purchased, Apple's limited warranty lasted a period of one year from the date of purchase. AC at ¶ 35 n.7. Per Plaintiff's opposition brief, "Plaintiff concedes he does not fall within the one-year warranty period set forth in Apple's Limited Warranty." Opp. at 20. Thus, Plaintiff's breach of express warranty claim fails because Plaintiff does not fall within the express warranty period. Therefore, the Court GRANTS Apple's motion to dismiss the breach of express warranty claim. Plaintiff claims that he can amend the amended complaint to include plaintiffs whose Watches manifested the alleged defect during the warranty period. Opp. at 19 n.10. However, prior to amending his complaint, Apple's motion to dismiss the original complaint put Plaintiff on notice of Apple's contention that Plaintiff's claim fails because Plaintiff "brought his claim after the expiration of the Limited Warranty." ECF No. 21 at 14. Plaintiff still failed to cure the deficiency in his amended complaint despite this notice. Thus, Plaintiff's claim is dismissed with prejudice because granting Plaintiff an additional opportunity to amend his complaint would be futile and unduly prejudicial because Plaintiff already had notice of this deficiency and failed to cure it. See Leadsinger, Inc. ,
D. Count 4 -Breach of Implied Warranty of Merchantability
Apple argues that Plaintiff's breach of implied warranty claim fails because Apple has disclaimed all implied warranties. Mot. at 20. Plaintiff's opposition contains no response to Apple's argument.
The Court need not delve into the distinctions between Colorado and California substantive law on the breach of implied warranty claim because Plaintiff has procedurally defaulted on this claim. "[F]ederal courts are to apply state substantive law and federal procedural law." Hanna v. Plumer ,
Likewise, the United States District Court for the District of Colorado has also dismissed a claim with prejudice if a plaintiff fails to respond to arguments regarding that claim raised in a defendant's motion to dismiss. See, e.g. , Shepard v. Rangel ,
Therefore, because Plaintiff has failed to respond to Apple's arguments, the Court GRANTS Apple's motion to dismiss the breach of the implied warranty of merchantability claim with prejudice because
E. Count 5 -Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act "provides a federal cause of action for state warranty claims." Tietsworth v. Sears ,
F. Count 6 -Unjust Enrichment
As discussed above, Plaintiff asserts this claim only under Colorado law. Under Colorado law, "a party claiming unjust enrichment must prove that (1) the defendant received a benefit (2) at the plaintiff's expense (3) under circumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation." Lewis v. Lewis ,
Here, there is an express contract: Apple's limited warranty. Moreover, this express contract limits what types of legal theories under which a plaintiff may recover. AC at ¶ 35 n.7 ("EXCEPT AS PROVIDED IN THIS WARRANTY AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, APPLE IS NOT RESPONSIBLE FOR DIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY BREACH OF WARRANTY OR CONDITION, OR UNDER ANY OTHER LEGAL THEORY ...." (emphasis added) ). The Colorado Supreme Court has held that "courts will refuse quantum meruit recovery when expressly contrary to the provisions of the written contract between the two parties." Dudding v. Norton Frickey & Assocs. ,
G. Plaintiff's Standing to Seek Injunctive Relief
Next, the Court discusses Plaintiff's standing to seek injunctive relief under Rule 12(b)(1). To establish standing
Plaintiff alleges that "[i]n the event that Plaintiff decides to have the repair done, he (as do other members of the Class) would still run the risk of future harm as the repaired Watch also would be prone to the same Defect described herein." AC at ¶ 48. However, the Ninth Circuit has held that "for injunctive relief, which is a prospective remedy, the threat of injury must be actual and imminent, not conjectural or hypothetical." Davidson v. Kimberly-Clark Corp. ,
Plaintiff cites Davidson v. Kimberly-Clark Corp. in support of the notion that Plaintiff faces an imminent threat of future harm. Plaintiff argues that in Davidson , the defendant's false advertising presented a threat of future harm because the plaintiff alleged that she wished to purchase Kimberly-Clark's products, but could not rely on Kimberly-Clark's representations.
Therefore, Plaintiff's prayer for injunctive relief is DISMISSED for lack of standing. Because granting Plaintiffs an additional opportunity to amend the complaint would not be futile, cause undue delay, or unduly prejudice Apple, and Plaintiffs have not acted in bad faith, the Court grants leave to amend. See Leadsinger, Inc. ,
IV. CONCLUSION
For the foregoing reasons, the Court DISMISSES without prejudice Plaintiff's UCL and CLRA claims. The Court DISMISSES with prejudice Plaintiff's breach of express warranty, breach of implied warranty of merchantability, Magnuson-Moss Warranty Act, and unjust enrichment claims. Moreover, the Court DISMISSES without prejudice Plaintiff's prayer for injunctive relief.
If Plaintiff elects to file an amended complaint, Plaintiff must do so within 30 days of this Order. If Plaintiff fails to file an amended complaint within 30 days or fails to cure the deficiencies identified in this order, the deficient claims or prayer for relief will be dismissed with prejudice. Plaintiff may not add new causes of action
IT IS SO ORDERED.