Obertman v. Electrolux Home Care Products, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 FELIX OBERTMAN, No. 2:19-cv-02487-KJM-AC 12 Plaintiff, 13 v. ORDER 14 ELECTROLUX HOME CARE PRODUCTS, INC. 15 Defendant. 16 17 In this putative class action over allegedly defective dehumidifiers, defendant 18 moves to dismiss several of plaintiff’s claims under Rule 12(b)(6). Mot., ECF No. 14. For the 19 reasons discussed below, the court GRANTS defendant’s motion in part and DENIES it in part. 20 I. BACKGROUND 21 This putative class action arises from one central claim: certain Frigidaire 22 Dehumidifiers including model numbers FFAD3033R1, FFAD5033R1 and FFAD7033R1 23 (collectively, the “products” or “dehumidifier”), suffer from a design defect that causes them to 24 display an “F0” error message on the products’ control panel, rendering the products “completely 25 useless.” First Am. Compl. (“FAC”) ¶ 1, ECF No. 12. Plaintiff alleges in 2017 he purchased a 26 Frigidaire dehumidifier, manufactured by Electrolux, from Best Buy for roughly $400. Id. ¶ 3. 27 According to the complaint, prior to purchase plaintiff reviewed the packaging, which advertised 28 the product was a dehumidifier, and relied on the packaging to decide whether to purchase the 1 product. Id. ¶ 5. Roughly a year after he purchased the dehumidifier, an “F0” error message 2 appeared on the product’s screen, and it stopped working. Id. ¶ 4. Plaintiff then disposed of the 3 product because it was “useless.” Id. Plaintiff contends defendant knew of the defect at the time 4 plaintiff purchased the product. Id. ¶ 88. 5 Plaintiff filed this action on December 12, 2019. Defendant filed a motion to 6 dismiss on March 4, 2020, ECF No. 7, and, in response, plaintiff filed the operative first amended 7 complaint, FAC, ECF No. 12. Defendant filed the instant motion to dismiss the first amended 8 complaint on April 8, 2020, Mot., plaintiff filed an opposition, Opp’n, ECF No. 16, and defendant 9 replied, Reply, ECF No. 18. 10 Plaintiff asserts six claims against defendant individually and on behalf of a class 11 of all other similarly situated purchasers for: (1) violation of California’s Consumers Legal 12 Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et. seq.; (2) violation of California’s Unfair 13 Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200–17210; (3) unjust enrichment; 14 (4) breach of implied warranty under the Song-Beverly Act, Cal. Civ. Code § 1790 et seq. and 15 Cal. Com. Code section 2314; (5) violation of California’s False Advertising Law (“FAL”), Cal. 16 Bus. & Prof. Code § 17500, and (6) violations of the Magnuson-Moss Warranty Act, 15 U.S.C. 17 § 2301, et seq. See generally FAC. Defendant moves to dismiss claims one through five. See 18 generally Mot. For the reasons below, the court GRANTS defendant’s motion in part and 19 DENIES it in part. 20 II. LEGAL STANDARD 21 A party may move to dismiss for “failure to state a claim upon which relief can be 22 granted.” Fed. R. Civ. P. 12(b)(6). A complaint must contain a “short and plain statement of the 23 claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although “detailed 24 factual allegations” are not required at the pleading stage, Bell Atl. Corp. v. Twombly, 550 U.S. 25 544, 555 (2007), the complaint must contain more than conclusory or formulaic recitations of 26 elements, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). The 27 complaint must contain “sufficient factual matter” to make the alleged claim at least plausible. 28 Ashcroft, 556 U.S. at 678; see also Hartmann v. Cal. Dep’t of Corr. & Rehab., 707 F.3d 1114, 1 1122 (9th Cir. 2013) (explaining plausibility requires that the complaint depict a cognizable legal 2 theory and sufficient factual allegations to support that theory) (citation omitted). Aside from 3 external facts properly subject to judicial notice, the court restricts its analysis to the face of the 4 complaint, construing the complaint in plaintiff’s favor and accepting well-pled factual 5 allegations as true. Erickson v. Pardus, 551 U.S. 89, 93–94 (2007). 6 III. ANALYSIS 7 A. Fraud and Consumer Protection Claims 8 Plaintiff’s UCL, CLRA and FAL claims are premised on the allegation that 9 defendant knew of an alleged defect in the Frigidaire dehumidifier, but knowingly concealed that 10 information from consumers. See FAC ¶¶ 14–17. “Accordingly, the complaint must satisfy the 11 heightened pleading standards of Rule 9(b).” Eisen v. Porsche Cars N. Am., Inc., No. CV 11- 12 9405 CAS FEMX, 2012 WL 841019, at *3 (C.D. Cal. Feb. 22, 2012) (citing Kearns v. Ford 13 Motor Co., 567 F.3d 1120, 1125–27 (9th Cir. 2008) (CLRA and UCL claims must satisfy Rule 14 9(b) where premised on allegations a defendant knew of a defect in its product, took steps to 15 conceal defect from consumers, and failed to disclose defect). Defendant argues the court should 16 dismiss plaintiff’s CLRA, UCL and FAL claims, because plaintiff has not adequately pled 17 defendant “knew of the alleged defect at the time he bought the dehumidifier,” Mot. at 12, a 18 requirement for UCL, CLRA and FAL claims, see Wilson v. Hewlett-Packard Co., 668 F.3d 19 1136, 1145 (9th Cir. 2012); VP Racing Fuels, Inc. v. Gen. Petroleum Corp., 673 F. Supp. 2d 20 1073, 1088 (E.D. Cal. 2009), and because “plaintiff has not pled his fraud-based claims with the 21 requisite particularity,” Mot. at 17. As set forth below, the court finds plaintiff has sufficiently 22 alleged defendant’s pre-sale knowledge of the defect at this stage and has pled his fraud claims 23 with the requisite particularity under Rule 9(b). 24 1. Defendant’s Knowledge of Defect 25 Rule 9(b) provides “[m]alice, intent, knowledge, and other conditions of a person’s 26 mind may be alleged generally.” Fed. R. Civ. P. 9(b). Therefore, defendant’s “knowledge need 27 only be alleged generally, with non-conclusory, plausible allegations.” Luong v. Subaru of Am. 28 Inc., 2018 WL 2047646, at *5 (N.D. Cal. May 2, 2018); 5A C. Wright & A. Miller, Fed. Prac. & 1 Proc. Civ. § 1301 (4th ed. 2020) (“A rigid rule requiring the detailed pleading of a condition of 2 mind … would run counter to the general ‘short and plain statement of the claim’ mandate in 3 [F.R.C.P.] 8(a) . . . .”). 4 Courts disagree on whether consumer complaints “in and of themselves adequately 5 support an inference that a manufacturer was aware of a defect[.]” Wilson v. Hewlett-Packard 6 Co., 668 F.3d 1136, 1147 (9th Cir. 2012). In Williams v. Yamaha Motor Co., 851 F.3d 1015 (9th 7 Cir. 2017), however, the Ninth Circuit clarified that consumer complaints may support an 8 allegation of presale knowledge of a defect in some circumstances. Id. at 1027. The court 9 clarified that its previous holding in Wilson, did not foreclose the use of consumer complaints to 10 show knowledge, but “absent dates to indicate that the complaints were made pre-sale, and some 11 evidence that defendant actually received the complaints, it would be speculative at best to find 12 that the defendant knew of the alleged defect.” Id. at 1027. 13 District courts have also found consumer complaints sufficient where plaintiff 14 alleges facts indicating defendant was aware of the complaints at the time plaintiff purchased the 15 item. Compare Resnick v. Hyundai Motor Am., Inc., No. CV 16-00593-BRO (PJWx), 2017 WL 16 1531192, at *15 (C.D. Cal. Apr. 13, 2017) (finding plaintiffs did not adequately allege knowledge 17 when plaintiffs did not plead facts indicating defendant was aware of particular complaints or 18 monitored particular websites), with Borkman v. BMW of N. Am., LLC, No. CV 16-2225 FMO 19 (MRWx), 2017 WL 4082420, at *5 (C.D. Cal. Aug. 28, 2017) (finding plaintiff sufficiently 20 alleged defendant’s knowledge of defect through consumer complaints to defendant’s dealers and 21 on third-party websites, aggregate data from dealers, consumer complaints to the National 22 Highway Traffic Safety Administration (NHTSA) and resulting notice from NHTSA, dealership 23 repair orders, and other internal sources of aggregate information about defect); Long v. Graco 24 Children’s Prods. Inc., No. 13-cv-01257-WHO, 2013 WL 4655763, at *6 (N.D. Cal. Aug. 26, 25 2013) (finding plaintiff sufficiently alleged defendants’ knowledge of defects because consumers 26 had complained directly to defendants, defendants had responded, and defendants had told 27 NHTSA they were “keenly aware” of issue). 28 ///// 1 Here, the FAC quotes specific complaints about the F0 error causing the products 2 to cease functioning that both pre-date his purchase and were submitted directly to defendant’s 3 own website, Frigidaire.com. See FAC ¶¶ 18–45. The majority of these pre-purchase customer 4 complaints, as pled, confirm the customer spoke with an employee of defendant over the phone 5 concerning the defect, or they confirm an agent of defendant specifically responded to the 6 complaint shortly after it was posted, if not both. See Opp’n at 8–9; see, e.g., FAC ¶ 19 7 (customer spoke to defendant over phone concerning defect), ¶ 22 (defendant responded to 8 complaint shortly after it was posted). Furthermore, plaintiff alleges specific examples of a 9 significant number of similar complaints about the issue on the websites of the products’ top 10 retailers and alleges defendant would have been aware of the issue due to product returns, 11 replacements or requests for refunds as a result of these complaints. Opp’n at 13 (citing FAC 12 ¶¶ 48–88). The significant number of complaints pre-dating plaintiff’s purchase, the alleged 13 responses by defendants’ agents to those complaints, the fact many of the complaints were posted 14 on defendants’ own website, and the many similar complaints on top retailers’ websites is 15 sufficient, in combination, to allege defendant’s knowledge at this stage. Cf. Espineli v. Toyota 16 Motor Sales, U.S.A., Inc., No. 2:17-CV-00698-KJM-CKD, 2019 WL 2249605, at *6 (E.D. Cal. 17 May 24, 2019) (finding consumer and NHTSA complaints insufficient to show knowledge 18 because complaint did “not allege how or where these complaints were made, or otherwise allege 19 how defendants could have been aware of them” and only three complaints predated plaintiff’s 20 purchase of the product). 21 Defendant argued at hearing the complaints are insufficient because they are about 22 a “safety feature” not a “defect.” However, the court finds plaintiff’s allegations and alleged 23 consumer complaints about an F0 error code appearing on an electronic display and the unit 24 simultaneously not functioning are sufficient to plead there is a “defect” at issue for purposes of 25 withstanding a motion to dismiss. See, e.g., FAC ¶ 29 (“Over 3 years ago, another consumer 26 stated that ‘this Frigidaire unit lasted exactly 1(one) yr. Unit quit working with a [sic] error code 27 ‘F0.’”). Whether the F0 error code is more properly characterized as a safety feature is an issue 28 more appropriately resolved on summary judgment, not on a motion to dismiss. 1 2. Requisite Level of Particularity 2 Next, defendant argues plaintiff’s fraud-based claims do not meet Rule 9(b)’s 3 pleading requirement because (1) plaintiff fails “to articulate the who, what, when, where, and 4 how of Electrolux’s allegedly fraudulent conduct,” Mot. at 18, (2) plaintiff’s FAL claim does not 5 identify an affirmative misleading statement, id., (2) “Plaintiff’s fraud-based claims fail to 6 adequately plead actual reliance,” id., and (3) plaintiff “fails to identify any unfair conduct,” id. at 7 19. The court addresses these arguments below. 8 a. Fraudulent Conduct 9 When a claim is “grounded in fraud,” the whole claim must be pleaded such that it 10 satisfies the particularity requirement of Rule 9(b). Cardenas v. NBTY, Inc., 870 F. Supp. 2d 984, 11 993 (E.D. Cal. 2012) (citing Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009)). 12 “[T]he Supreme Court of California has held that nondisclosure is a claim for misrepresentation 13 in a cause of action for fraud,” and therefore it must be pleaded with Rule 9(b) particularity. 14 Kearns, 567 F.3d at 1127. Moreover, “[t]he Ninth Circuit has specifically held that Rule 9(b)’s 15 heightened pleading standards apply to claims for violations of the CLRA and UCL.” Id. at 1125 16 (citation omitted). Rule 9(b) requires that “the circumstances constituting the alleged fraud be 17 specific enough to give defendants notice of the particular misconduct . . . so that they can defend 18 against the charge and not just deny that they have done anything wrong.” Id. at 1124 (quoting 19 Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)). “Averments of fraud must be 20 accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Ness v. 21 Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 22 137 F.3d 616, 627 (9th Cir. 1997)). 23 However, “alleging fraudulent omission or concealment,” as plaintiff does here, 24 “is somewhat different from pleading an affirmative misrepresentation in that a plaintiff cannot 25 generally plead either the specific time of an omission or the place it occurred.” Stewart v. 26 Electrolux Home Prods., 304 F. Supp. 3d 894, 906 (E.D. Cal. 2018) (citing Falk v. General 27 Motors, 496 F. Supp. 2d 1098 (N.D. Cal. 2007) (“Clearly, a plaintiff in a fraud by omission suit 28 will not be able to specify the time, place, and specific content of an omission as precisely as 1 would a plaintiff in a false representation claim.”)). “Despite this distinction, claims sounding in 2 fraud, even concealment or omission claims, still must be pled with particularity” by 3 “describ[ing] the content of the omission and where the omitted information should or could have 4 been revealed, as well as provide representative samples of advertisements, offers, or other 5 representations that plaintiff relied on to make her purchase and that failed to include the 6 allegedly omitted information.” Id. (citing Eisen v. Porsche Cars N.A., Inc., No. 11–cv–9405 7 CAS (FEMx), 2012 WL 841019, at * 3 (C.D. Cal. Feb. 22, 2012)). 8 Here, plaintiff bases his fraud claims primarily on the contention that defendant 9 “made partial representations to Plaintiff and class members while suppressing the Products’ 10 defective nature,” specifically “by displaying the Products and describing their features, the 11 product packaging implied that the Products were suitable for use as dehumidifiers, without 12 disclosing that they had a critical defect that could result in the Products being rendered 13 completely useless.” FAC ¶ 16. This description is sufficient to put defendant on notice of what 14 was omitted, namely the alleged defect, and where it should have been included, that is on the 15 products’ packaging. Furthermore, plaintiff also adequately pleads his reliance on the packaging 16 as well as the approximate date plaintiff purchased the dehumidifier, saying: 17 Mr. Obertman reviewed the Product’s packaging prior to purchase. Defendant disclosed on the packaging that the Products were 18 dehumidifiers and described features typical of dehumidifiers but did not disclose the defect. Had there been a disclosure, Mr. Obertman 19 would not have bought the Product because the defect would have been material to him, or at the very least, he would have purchased 20 the product at a substantially reduced price. Mr. Obertman relied on the packaging in making his purchase decision. 21 22 FAC ¶ 5. This is sufficient to meet Rule 9(b)’s requirements. See Falk, 496 F. Supp. 2d at 1099 23 (finding fraud adequately pleaded where defendant failed to disclose faulty speedometer). 24 Accordingly, defendant’s motion to dismiss plaintiff’s fraud claims on these 25 grounds is DENIED. 26 ///// 27 ///// 28 ///// 1 b. FAL Claim 2 As to plaintiff’s claim under California’s False Advertising Law (FAL), Cal. Bus. 3 & Prof. Code §§ 17500 et seq.,1 in particular, defendant argues the claim “is not cognizable when 4 based solely on an omission of material information.” Mot. at 18 (citing Stewart, 304 F. Supp. 3d 5 at 907–08). 6 The FAL proscribes “mak[ing] or disseminat[ing] . . . any statement . . . which is 7 untrue or misleading, and which is known, or by the exercise of reasonable care should be known, 8 to be untrue or misleading . . .” “with intent directly or indirectly to dispose of real or personal 9 property.” Stewart, 304 F. Supp. 3d at 906 (quoting Cal. Bus. & Prof. Code § 17500). To 10 adequately plead a deceptive advertising claim, “Rule 9(b) requires that the plaintiff or plaintiffs 11 identify specific advertisements and promotional materials; allege when the plaintiff or plaintiffs 12 were exposed to the materials; and explain how such materials were false or misleading.” Takano 13 v. Procter & Gamble Co., No. 2:17-CV-00385-TLN-AC, 2018 WL 5304817, at *8 (E.D. Cal. 14 Oct. 24, 2018) (citation omitted). Because plaintiff’s FAL claim is predicated on a theory of 15 omission, “plaintiffs must identify an actual affirmative statement by Electrolux that was made 16 false by the omission of some material fact.” Stewart, 304 F. Supp. 3d at 908 (citing Hodsdon v. 17 Mars, Inc., 162 F. Supp. 3d 1016, 1023 (N.D. Cal. 2016) (“[A] plaintiff may state a claim under 18 the FAL if the defendant actually made a statement, but omitted information that undercuts the 19 veracity of the statement.”), aff’d, 891 F.3d 857 (9th Cir. 2018); but see Hodsdon, 162 F. Supp. 20 3d at 1023 (noting split in district court opinions and acknowledging “[m]any courts have held a 21 plaintiff who asserts that a business omitted a material fact in its advertisements, labels, or 22 literature has not stated a claim under the FAL.”) (collecting cases). 23 ///// 24 1 “It is unlawful for any person, firm, corporation or association . . . with intent directly or 25 indirectly to dispose of real or personal property . . . to make or disseminate . . . in any newspaper 26 or other publication, or any advertising device, . . . any statement, concerning that real or personal property . . . which is untrue or misleading, and which is known, or which by the exercise of 27 reasonable care should be known, to be untrue or misleading . . . .” Cal. Bus. & Prof. Code § 17500. 28 1 Defendant is correct that plaintiff does not identify any actual affirmative 2 statement made by Electrolux that was rendered false by the omission of some material fact. 3 Plaintiff falls just short of pleading a specific statement, saying that “by displaying the Products 4 and describing their features, the product packaging implied that the Products were suitable for 5 use as dehumidifiers.” FAC ¶ 16. He provides no further detail about the packaging, however. 6 Id. This is insufficient to put defendant on notice of the precise representations plaintiff claims 7 were false and misleading. See Stewart, 304 F. Supp. 3d at 908 (granting motion to dismiss 8 where plaintiff alleged “only generally that Electrolux, through ‘advertising, marketing and other 9 publications, [made] statements that were untrue or misleading’”; if claim based on “express 10 statements in the warranty . . . the complaint must specifically identify these statements so that 11 Electrolux has sufficient notice of the representations Plaintiffs claim were false and 12 misleading”); Landen v. Electrolux Home Prod., Inc., No. CV 13-1033 DSF (SHX), 2013 WL 13 12145506, at *1–2 (C.D. Cal. Apr. 29, 2013) (granting motion to dismiss FAL claim where 14 plaintiff alleged false advertising claim based on defendant’s “promot[ing] the washers as fit for 15 ordinary use,” because plaintiff provided “only the broadest sketch of the types of statements and 16 advertising that he claims were false or fraudulent” and “[a]dditional specificity is required”). 17 Accordingly, plaintiff has not sufficiently pleaded its FAL claim and the claim is 18 DISMISSED, but with leave to amend, see Fed. R. Civ. P. 15(a); Leadsinger, Inc. v. BMG Music 19 Pub., 512 F.3d 522, 532 (9th Cir. 2008) (noting leave to amend freely given, except where there 20 is evidence of “undue delay, bad faith or dilatory motive on the part of the movant, repeated 21 failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing 22 party by virtue of allowance of the amendment, [or] futility of amendment”). 23 c. Actual Reliance 24 Defendant argues plaintiff’s “fraud-based claims also fail to adequately plead 25 actual reliance.” Lucas v. Breg, Inc., 212 F. Supp. 3d 950, 969–70 (S.D. Cal. 2016) (citing, inter 26 alia, In re iPhone Application Litig., 6 F. Supp. 3d 1004, 1018 (N.D. Cal. 2013) (“[N]one of the 27 Plaintiffs presents evidence that he or she even saw, let alone read and relied upon, the alleged 28 misrepresentations[.]”). Specifically, defendant argues plaintiff “fails entirely to allege that he 1 saw or read, much less relied on” any false advertising. Mot. at 19. However, plaintiff alleges 2 he: 3 reviewed the Product’s packaging prior to purchase. Defendant disclosed on the packaging that the Products were dehumidifiers and 4 described features typical of dehumidifiers but did not disclose the defect. Had there been a disclosure, Mr. Obertman would not have 5 bought the Product because the defect would have been material to him, or at the very least, he would have purchased the product at a 6 substantially reduced price. Mr. Obertman relied on the packaging in making his purchase decision. 7 8 FAC ¶ 5. This paragraph sufficiently alleges plaintiff “saw or read” the product packaging and 9 that he relied on it in deciding to purchase the product. Plaintiff has adequately pleaded reliance 10 and defendant’s argument for dismissal is unavailing. See Falk, 496 F. Supp. 2d at 1099 (finding 11 plaintiffs pleaded reliance by pleading “a ‘reasonable customer’ would not have paid the asking 12 price had it been disclosed that the speedometer was defective; similarly, this same customer may 13 have justifiably relied on [defendant’s] failure to disclose defects in the speedometer”). 14 d. Unfair Conduct (UCL Claim) 15 Defendant also argues the court must dismiss plaintiff’s fraud-based claims, 16 particularly his claims made invoking California’s Unfair Competition Law, because the claims 17 “fail to identify any unfair conduct.” Mot. at 19. Specifically, defendant argues plaintiff’s 18 allegations that the dehumidifiers stop working within the “usual lifespan” of a dehumidifier do 19 not allege “unfair conduct” because plaintiff does not allege what the “useful lifespan” of a 20 dehumidifier is, nor that the dehumidifiers will fail during the term of the applicable warranties. 21 Id. at 20. 22 There is some confusion in the law over the applicable test for “unfair” conduct 23 following the California Supreme Court’s decision “that any finding of unfairness to competitors 24 under section 17200 [must] be tethered to some legislatively declared policy or proof of some 25 actual or threatened impact on competition,” in Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular 26 Tel. Co., 20 Cal. 4th 163, 186–87 (1999). See Davenport v. Litton Loan Servicing, LP, No. C 10- 27 0679 RS, 2011 WL 13137950, at *6 n.4 (N.D. Cal. June 3, 2011) (explaining differing 28 interpretations among district courts over how this holding affects UCL claims by consumers). 1 While aware of this authority, this court has consistently applied the traditional test for a 2 consumer claim: “A business practice is unfair within the meaning of the UCL if it violates 3 established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes 4 injury to consumers which outweighs its benefits.” See Espineli, 2019 WL 2249605, at *9 5 (quoting McKell v. Washington Mut., Inc., 142 Cal. App. 4th 1457, 1473 (2006)). Defendant has 6 not offered any authority suggesting this approach is in error. 7 The determination whether a practice is unfair “is one of fact which requires a 8 review of the evidence from both parties[,]” and “thus cannot usually be made on [motions to 9 dismiss.]” McKell, 142 Cal. App. 4th at 1473. Here, the allegations are sufficient to survive 10 defendant’s motion to dismiss. Plaintiff alleges defendants knew the F0 defect rendered the 11 products useless, and yet falsely advertised them as useable dehumidifiers. Plaintiff further 12 alleges these “unscrupulous” acts caused injury to consumers that outweigh any benefits, 13 pleading. See FAC ¶ 122. Defendant’s motion to dismiss on this basis is DENIED. 14 e. Conclusion 15 For the foregoing reasons, plaintiff’s fraud claims are pled with the requisite 16 particularity under Rule 9(b), with the exception of the claim under California’s False Advertising 17 Law, Cal. Bus. & Prof. Code § 17500 et seq, which the court DISMISSES with leave to amend. 18 B. Unjust Enrichment Claim 19 Defendant argues plaintiff’s unjust enrichment claim cannot survive, because 20 unjust enrichment is not a stand-alone cause of action in California, but rather “the theory 21 underlying a claim that a defendant has been unjustly conferred a benefit though mistake, fraud, 22 coercion, or request.” Reply at 10 (citing Resnick v. Hyundai Motor Am., Inc., 2017 U.S. Dist. 23 LEXIS 67525, at *68 (C.D. Cal. Apr. 13, 2017). Defendant concedes courts sometimes treat 24 unjust enrichment claims as quasi-contract claims seeking restitution, see id. at 11, but argues 25 such a claim is not cognizable here, because plaintiff was provided with an express warranty, and 26 an express contract between the parties prevents a claim based on quasi-contract. Id. (citing 27 Rutherford Holding LLC v. Playa Del Rey, 223 Cal. App. 4th 221, 231 (2014) (action based on 28 quasi-contract “cannot lie where there exists between the parties a valid express contract covering 1 the same subject matter” unless express contract is void or was rescinded). Plaintiff argues the 2 Ninth Circuit has rejected the argument that unjust enrichment claims are not cognizable as a 3 claim and says he has adequately alleged an unjust enrichment claim. Opp’n at 20 (citing Jordan 4 v. Wonderful Citrus Packing LLC, 2018 WL 4350080, at *4 (E.D. Cal. Sept. 10, 2018) (holding 5 “bases for a quasi-contract claim may be unjust enrichment that is caused by conversion, 6 coercion, fraud, or mistake”). 7 As this court has previously discussed, the Ninth Circuit in Astiana v. Hain 8 Celestial Group, Inc., 783 F.3d 753, 762 (9th Cir. 2015), interpreted California law and held that 9 while “there is not a standalone cause of action for unjust enrichment, which is synonymous with 10 restitution, . . . [w]hen a plaintiff alleges unjust enrichment, a court may construe the cause of 11 action as a quasi-contract claim seeking restitution.” McMillan v. Lowe’s Home Centers, LLC, 12 No. 115CV00695 KJM SMS, 2016 WL 232319, at *6 (E.D. Cal. Jan. 20, 2016). “When a 13 plaintiff alleges unjust enrichment, a court may ‘construe the cause of action as a quasi-contract 14 claim seeking restitution.’” Astiana, 783 F.3d at 762 (quoting Rutherford Holdings, LLC, 15 223 Cal. App. 4th at 231). 16 However, that plaintiff has not pleaded the absence of an enforceable contract does 17 not doom the claim at the motion to dismiss stage, particularly because the claims here do not 18 expressly arise out of any breach of contract. Compare Copart, Inc. v. Sparta Consulting, Inc., 19 No. 214-CV-00046-KJM-CKD, 2015 WL 3622618, at *15 (E.D. Cal. June 9, 2015) (rejecting 20 defendant’s argument that unjust enrichment claim must be dismissed because there may be 21 enforceable contract), with Lennar Mare Island, LLC v. Steadfast Ins. Co., No. 2:12-CV-02182- 22 KJM-KJN, 2016 WL 829210, at *4 (E.D. Cal. Mar. 3, 2016) (dismissing unjust enrichment claim 23 because complaint’s “claims unambiguously arise from alleged breaches of contract” and plaintiff 24 did not plead absence of an enforceable contract). As defendant appears to recognize, whether 25 the express warranty voids plaintiff’s unjust enrichment claim is a question for summary 26 judgment. See Mot. at 20–21 (“Plaintiff has gone to great lengths to avoid mentioning the 27 warranty that came with his dehumidifier. If Plaintiff seeks to proceed in quasi-contract, 28 Electrolux will address this claim and the warranty at an appropriate time.”). 1 Accordingly, defendant’s motion to dismiss on this ground is DENIED. 2 C. Implied Warranty Claim (California Commercial Code Section 2314) 3 Defendant argues plaintiff’s implied warranty claim under California Commercial 4 Code section 23142 fails because plaintiff does not “stand in vertical contractual privity with the 5 defendant.” Mot. at 21 (citing Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1024 (9th Cir. 6 2008)). Plaintiff argues there is an exception to this rule for consumers who are the intended 7 third-party beneficiaries of the contract, when a defendant-manufacturer sells its products through 8 a network of authorized dealers who are not the intended beneficiaries of the warranties 9 associated with the product. Opp’n at 20–21 (citing Clark v. LG Electronics U.S.A., Inc., No. 13– 10 cv–485 JM (JMA), 2013 WL 5816410 (S.D. Cal. Oct. 29, 2013)). 11 Both parties acknowledge there is a split among district courts within the Ninth 12 Circuit on this issue. See Opp’n at 22; Reply at 11; see also Zeiger v. WellPet LLC, 304 F. Supp. 13 3d 837, 854 (N.D. Cal. 2018) (recognizing split in authority). Plaintiff cites several district court 14 cases that have found a third-party beneficiary exception to California’s vertical privity rule, 15 while defendant argues that, because no binding authority has found such an exception, a district 16 court should not invent an exception to a California law. Both parties analyze Clemens v. 17 DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008), in which the Ninth Circuit acknowledged 18 “[s]ome particularized exceptions to the [vertical privity] rule exist,” listed those exceptions, none 19 of which are relevant here, and found plaintiff’s case did not fit within any of those exceptions. 20 Id. at 1023. The court then rejected plaintiff’s argument that the court should find an additional 21 exception to the rule allowing his case to proceed, stating “[w]e decline this invitation to create a 22 new exception that would permit . . . Clemens’s action to proceed . . . California courts have 23 painstakingly established the scope of the privity requirement under California Commercial Code 24 section 2314, and a federal court sitting in diversity is not free to create new exceptions to it.” Id. 25 at 1023–24 (citations omitted). 26 27 2 “[A] warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.” Cal. Com. Code § 2314(1). 28 1 Even after Clemens, some district courts have cited Gilbert Fin. Corp. v. Steelform 2 Contracting Co., 82 Cal. App. 3d 65 (1978), a California case predating Clemens, in support of 3 the conclusion that a third-party beneficiary exception is available under California law. In 4 Gilbert, the court “allowed the owner of a building to bring an implied warranty claim against a 5 subcontractor who installed a leaky roof in the absence of privity because the owner was an 6 intended third-party beneficiary of the contract between the owner's general contractor and the 7 subcontractor.” Zeiger, 304 F. Supp. 3d at 854 (citing Gilbert, 82 Cal. App 3d at 67, 69). Some 8 courts reconciling Clemens and Gilbert have concluded that, because Clemens did not explicitly 9 mention a third-party beneficiary exception, it does not preclude one, and Gilbert suggests there 10 is such an exception. However, Gilbert was not a products liability case, and, as the court in 11 Snyder v. TAMKO Bldg. Prod., Inc., 2019 WL 4747950 (E.D. Cal. Sept. 30, 2019) reasoned, 12 “[t]hat the Ninth Circuit does not mention or discuss the third-party beneficiary exception in its 13 list of exceptions to the rule of privity, [] is what persuades this Court and others that Clemens 14 forecloses the third-party beneficiary exception to the rule of privity. Id. at *7–8 (internal 15 quotation marks and citations omitted). 16 Following the reasoning in Snyder and the precedent set by Clemens, and in light 17 of the lack of binding authority holding otherwise, this court, too, declines to find a new 18 exception to the vertical privity requirement that California courts have not declared. See id.; 19 Loomis v. Slendertone Distribution, Inc., 420 F. Supp. 3d 1046, *1088–89 (S.D. Cal. 2019) 20 (“[N]o published decision of a California court has applied [the third-party beneficiary] doctrine 21 in the context of a consumer claim against a product manufacturer.” (citation omitted)). 22 Accordingly, plaintiff’s implied warranty claim under California Commercial 23 Code section 2314 is DISMISSED without leave to amend, see Leadsinger, Inc., 512 F.3d at 532 24 (noting district court may deny leave to amend where amendment would be futile). 25 IV. CONCLUSION 26 The court GRANTS defendant’s motion to dismiss in part and denies it in part: 27 1. Plaintiff’s false advertising claim is DISMISSED with leave to amend; 28 ///// 1 2. Plaintiff’s implied warranty claim under California Commercial Code 2 section 2314 is DISMISSED without leave to amend; and 3 3. The balance of defendant’s motion to dismiss is DENIED. 4 Plaintiff shall file an amended complaint within twenty-one (21) days of this order. 5 This order resolves ECF No. 14. 6 IT IS SO ORDERED. 7 DATED: August 28, 2020. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28