Norik Barakezyan v. Bmw of North America ( 2018 )

FILED
NOT FOR PUBLICATION
MAR 22 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NORIK BARAKEZYAN, as an No. 16-56094
individual, on behalf of himself, all others
similarly situated, and the general public, D.C. No.
2:16-cv-00173-SJO-GJS
Plaintiff-Appellant,
v. MEMORANDUM*
BMW OF NORTH AMERICA, LLC, a
Delaware Limited Liability Company;
DOES, 1 through 100, inclusive,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
S. James Otero, District Judge, Presiding
Argued and Submitted February 13, 2018
Pasadena, California
Before: McKEOWN and WARDLAW, Circuit Judges, and QUIST,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Gordon J. Quist, United States District Judge for the
Western District of Michigan, sitting by designation.
Norik Barakezyan appeals the dismissal with prejudice of his class action
alleging that BMW’s carbon ceramic brakes (“CCBs”) were defective and thereby
breached BMW’s express warranty and the implied warranty of merchantibility,
and violated California’s Unfair Competition Law (“UCL”), California Business &
Professions Code section 17200. We review de novo, Mollett v. Netflix, Inc., 795
F.3d 1062, 1065 (9th Cir. 2015), and we reverse and remand for further
proceedings.
1. Barakezyan’s Second Amended Complaint (“SAC”) contains
adequate, plausible allegations that the CCB defect was a manufacturing defect and
thereby violated BMW’s express warranty. The fact that the SAC alleges that all
BMW CCBs exhibit the defect does not preclude the defect from being a
manufacturing defect—under California law a manufacturing defect encompasses
instances where products differ, even uniformly, from a manufacturer’s intended
result or design. Barker v. Lull Eng’g Co., 20 Cal. 3d 413, 429 (1978); see also
Escola v. Coca Cola Bottling Co., 24 Cal. 2d 453, 459 (1944); Garrett v.
Howmedica Osteonics Corp., 153 Cal. Rptr. 3d 693, 706–07 (Cal. Ct. App. 2013);
In re Coordinated Latex Glove Litig., 121 Cal. Rptr. 2d 301, 315 (Cal. Ct. App.
2002), as modified on denial of reh’g (July 15, 2002). The SAC meets that
standard by alleging that BMW’s CCBs have tension relief cracks, deviating from
2
BMW’s design. And furthermore, the SAC does not allege an entirely uniform
CCB defect because it states that the defect manifests at different mileages,
temperatures, and severities—allegations which must be taken as true when
adjudicating a motion to dismiss.
2. Barakezyan’s Third Amended Complaint (“TAC”) sufficiently alleges
that the CCB defect constitutes a substantial safety hazard and thereby breaches the
implied warranty of merchantibility. See Mexia v. Rinker Boat Co., 95 Cal. Rptr.
3d 285, 289 (Cal. Ct. App. 2009). Taking the allegations as true, the CCBs, when
engaged, emit an extremely loud, long, high-pitched noise, which has, on
numerous occasions, distracted Barakezyan and other BMW drivers, as well as
nearby pedestrians. That, along with allegations that the noise is intermittent and
manifests at different mileages, meaning that the noise has the potential to surprise,
at least plausibly pleads a safety hazard, even if the danger is somewhat less than
that caused by a malfunctioning sunroof that opens on a highway and causes a
blizzard of papers. Cf. Brand v. Hyundai Motor Am., 173 Cal. Rptr. 3d 454, 459,
461 (Cal. Ct. App. 2014).1 Barakezyan need not wait for a dangerous situation to
occur to vindicate his right to a vehicle free of substantial safety hazards.
1
We also note that the district court cited no authority for the rule that noise
alone cannot constitute a safety hazard, and no such authority has been presented
or located on appeal.
3
3. As BMW admits, because Barakezyan sufficiently pleaded violations
of express and implied warranties, he sufficiently pleaded a violation of the
unlawful prong of the UCL. Berryman v. Merit Prop. Mgmt., Inc., 62 Cal. Rptr. 3d
177, 185–86 (Cal. Ct. App. 2007). BMW also admitted at oral argument that, as
for the UCL’s fraudulent prong, sufficiently pleading a substantial safety hazard
caused by a defect for merchantibility is also sufficient under a duty to disclose
theory, as pleaded here.
Finally, as for the UCL’s unfair prong, the TAC is sufficient under either
test. Taking the allegations as true, the CCB’s price premium, acquired through
failing to disclose a substantial safety hazard, is a substantial consumer injury.
That injury is not reasonably avoidable by consumers and there is no
countervailing benefit to consumers or competition by BMW failing to disclose its
allegedly defective and dangerously loud CCBs. See Daugherty v. Am. Honda
Motor Co., 51 Cal. Rptr. 3d 118, 130 (Cal. Ct. App. 2006), as modified (Nov. 8,
2006). And those same facts constitute an anticompetitive business practice
harmful to consumers. See Belton v. Comcast Cable Holdings, LLC, 60 Cal. Rptr.
3d 631, 640–41 (Cal. Ct. App. 2007). Since the TAC alleges that other CCB
manufacturers make non-defective CCBs, the fact that those manufacturers fail to
make a disclosure is irrelevant.
4
REVERSED; REMANDED FOR FURTHER PROCEEDINGS.
5