Lux Global Auto Sales, Inc. v. Nissan North America, Inc. ( 2022 )

1 . 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 LUX GLOBAL AUTO SALES, a No. 2:21-cv-02157-JAM-AC California corporation, and 12 MARIA VELARDE, on behalf of themselves and others 13 similarly situated, ORDER GRANTING MOTION TO DISMISS 14 Plaintiffs, 15 v. 16 NISSAN NORTH AMERICA, INC., and DOES 1 to 10, 17 Defendants. 18 19 Lux Global Auto Sales and Maria Velarde filed this lawsuit 20 against Nissan North America, Inc., and various fictitious 21 persons (collectively “Defendants”) for allegedly violating 22 § 17200 of California’s Business and Professions Code—also known 23 as California’s Unfair Competition Law. See First Am. Comp. 24 (“FAC”) ¶ 69, ECF No. 8. Thereafter, Lux Global Auto Sales 25 voluntarily dismissed its claim against Defendants without 26 prejudice. See Stipulation of Dismissal, ECF No. 11. Velarde 27 (“Plaintiff”) maintained her claims and Defendants filed a motion 28 to dismiss and request for judicial notice. See Mot. to Dismiss 1 (“Mot.”), ECF No. 15; see also Req. for Judicial Notice, ECF 2 No. 15-1. Plaintiff filed her opposition and Defendants replied. 3 See Opp’n, ECF No. 22; see also Reply, ECF No. 24. 4 For the reasons set forth below, the Court GRANTS 5 Defendants’ Motion to Dismiss without leave to amend.1 6 I. BACKGROUND 7 Plaintiff filed this suit because of Defendants’ alleged 8 failures to comply with the California Emissions Warranty 9 (“Warranty”). FAC ¶ 1. Under this Warranty, car manufacturers— 10 like Defendants—must provide additional coverage for specific 11 components of Super Ultra Low Emissions Vehicles (“SULEV”) if the 12 California Air Resources Board (“CARB”) issued them non-methane 13 organic gases or vehicle equivalent credits. Id. Such parts are 14 generally covered for eight years or 100,000 miles; high-mileage 15 parts are covered for 112,500 miles (collectively referred to as 16 “Extended Coverage”). Id. Plaintiff contends Defendants 17 concocted a scheme to deprive Nissan SULEV owners of these 18 protections by “unilaterally defining and wrongfully limiting the 19 parts that should properly be identified as parts covered by the 20 [] Warranty and covered for the Extended Coverage period.” Id. 21 ¶ 7. Plaintiff argues Defendants’ supposed mischaracterizations 22 enables them to curb the costs of its warranty-related repairs 23 because “most if not all dealerships or customers will not 24 investigate or understand what components should actually and 25 correctly be covered under the [] Warranty . . . .” Id. ¶ 8. 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for September 13, 2022. 1 Plaintiff asserts Defendants’ supposed scheme is 2 demonstrated by their refusal to provide Extended Coverage to 3 SULEV transmissions, pointing to her own experience as evidence. 4 Id. ¶ 30. Plaintiff owns a 2019 Nissan Sentra—a SULEV vehicle. 5 In 2019, prior to being driven for 100,000 miles or in use for 6 eight years, Plaintiff’s vehicle exhibited “classic symptoms” of 7 “transmission slipping” as it would shake and hesitate upon 8 acceleration. FAC ¶ 30. Because of these issues, Plaintiff 9 contacted Defendants and was informed her transmission was not 10 under warranty. Id. Since Defendants denied Plaintiff 11 assistance, Plaintiff took her vehicle to a local repair shop and 12 “paid thousands of dollars out of pocket to have the transmission 13 repairs performed.” Id. ¶ 34. Plaintiff argues the Warranty’s 14 Extended Coverage should have encompassed these repairs because 15 the transmission’s malfunctioning increased the vehicle’s 16 emission output—which Plaintiff argues triggers such coverage 17 pursuant to California Code of Regulations’ Title 13 18 §§ 1961(a)(8), 2035, 2037, and 2038. Id. ¶¶ 5, 39. 19 Based on these allegations, Plaintiff initiated this 20 diversity action pursuant to 28 U.S.C. § 1332(d)(2)(A) and filed 21 her First Amended Complaint consisting of one claim under § 17200 22 of California’s Business and Professions Code—also known as 23 California’s Unfair Competition Law. Id. ¶ 66. 24 II. OPINION 25 A. Legal Standard 26 Under FRCP 12(b)(6), a court can grant a motion to dismiss 27 when the complaint fails “to state a claim upon which relief can 28 be granted.” Generally, affirmative defenses—like res judicata— 1 cannot be raised in such a motion. Scott v. Kuhlmann, 746 F.2d 2 1377, 1378 (9th Cir. 1994). When, however, the defense does not 3 raise disputed issues of fact—such as here—res judicata is 4 properly asserted in a motion to dismiss. Id.; see also Intri– 5 Plex Technologies, Inc. v. Crest Group, Inc., 499 F.3d 1048 (9th 6 Cir. 2007) (examining a 12(b)(6) motion’s res judicata defense 7 and affirming a district court's dismissal on such grounds). 8 Furthermore, when deciding a motion to dismiss, a district court 9 can consider matters of judicial notice without turning it into 10 a motion for summary judgment. United States v. Ritchie, 342 11 F.3d 903, 908 (9th Cir. 2003) 12 B. Judicial Notice 13 Defendants ask the Court take judicial notice of the Order 14 and Judgment Granting Final Approval of Class Action Settlement 15 and Settlement Agreement entered in Weckwerth v. Nissan North 16 America, Inc., Case No. 3:18-cv-00588 (M.D. Tenn. Mar. 10, 2020). 17 See Req. for Judicial Notice, ECF No. 15-1; see also Order and J. 18 Granting Final Approval of Class Action Settlement (“Judgment”), 19 Exh. 1 to Mot., ECF No. 15-2, Settlement Agreement ¶ 34, Exh. 2 20 to Mot., ECF No. 15-3. The Court can “take judicial notice of 21 court filings and other matters of public record,” Reyn's Pasta 22 Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 23 2006), and accordingly grants Defendants’ request. The Court’s 24 judicial notice, however, extends only to the existence of these 25 documents and not to their substance to the extent it is disputed 26 or irrelevant. Lee v. City of Los Angeles, 250 F.3d 668, 690 27 (9th Cir. 2001). 28 /// 1 C. Res Judicata 2 The parties dispute whether the doctrine of res judicata (or 3 claim preclusion) bars Plaintiff’s claim. Defendants argue the 4 class action settlement and judgment entered in Weckwerth 5 (“Weckwerth Judgment”) precludes Plaintiff’s claim under the 6 doctrine of res judicata. See Mot. at 4. The Weckwerth Judgment 7 incorporated the parties’ settlement agreement and released with 8 prejudice all past, present, and future transmission-related 9 claims for certain vehicles manufactured by Defendants—including 10 Plaintiff’s 2013 Sentra—pursuant to the provision below: 11 “Released Claims” means and includes any and all claims, demands, rights, damages, obligations, suits, 12 debts, liens, contracts, agreements, and causes of 13 action of every nature and description whatsoever, ascertained or unascertained, suspected or unsuspected, 14 accrued or unaccrued, existing or claiming to exist, including those unknown, both at law and equity which 15 have been brought, which might have been brought, and which might be brought in the future upon the happening 16 of certain events, against the Released Parties, or any 17 of them, based upon or in any way related to transmission design, manufacturing, performance, or 18 repair of Class Vehicles, including but not limited to all claims asserted in the Lawsuits, whether based upon 19 breach of contract, violation of a duty sounding in tort, violation of any state or federal statute or 20 regulation, violation of any state consumer protection 21 statute or regulation (including any lemon law statute or regulation), fraud, unjust enrichment, money had and 22 received, restitution, equitable relief, punitive or exemplary damages and civil penalties and fines or any 23 other claims whatsoever under federal or state law. See Settlement Agreement ¶ 34 (emphasis added); see also 24 Judgment at n. 1. 25 Notably, Plaintiff did not opt out of the settlement agreement. 26 See Timely Opt Out List, Exh. A to Mot., ECF No. 15-2. As a 27 result, Defendants contend Plaintiff’s claim is barred and asks 28 1 the Court to dismiss it with prejudice. 2 In opposition, while she does not deny that she did not opt 3 of out of the Weckwerth Judgment and concedes it “bars a 4 subsequent case,” Plaintiff argues the Weckwerth Judgment 5 invalidates the public policy underlying the Warranty’s Extended 6 Coverage and is therefore unenforceable. See Opp’n at 1-2. To 7 support her contention, Plaintiff: (1) states the Weckwerth 8 Judgment “shortens the warranty for SULEV transmissions by [one] 9 year or 16,000 miles” so that class members do not receive the 10 Extended Coverage’s full benefit of eight years or 100,000 miles; 11 and (2) cites cases where the California Supreme Court, a 12 California Appellate court, or a federal court outside this 13 Court’s jurisdiction analyzed contracts or settlements that 14 allegedly ran afoul of public policy to render them void. Id. at 15 2-3. As a result, Plaintiff does not dispute Defendants’ 16 contention that her complaint relies on a claim released by the 17 Weckwerth Judgment. Instead, she only argues res judicata does 18 not bar it because the Weckworth Judgment’s “contravenes the 19 public policy underpinning” the Warranty’s Extended Coverage. 20 Id. 21 Since this is a diversity action, the laws of the forum 22 state, California, apply. Bates v. Union Oil Co. of Cal., 944 23 F.2d 647, 649 (9th Cir. 1991). Under California law, the 24 preclusive effect of a prior federal court judgment is resolved 25 pursuant to federal law. Lumpkin v. Jordan, 49 Cal.App.4th 1223, 26 1230, 57 Cal.Rptr.2d 303 (1st Dist. 1996). Under federal law, 27 res judicata applies “whenever there is (1) an identity of 28 claims, (2) a final judgment on the merits, and (3) privity 1 between parties.” Stratosphere Litig. L.L.C. v. Grand Casinos, 2 Inc., 298 F.3d 1137, 1143 n. 3 (9th Cir. 2002) (citing Owens v. 3 Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 4 2001)). A prior valid judgment “operates as an absolute bar to a 5 second suit between the same parties or their privies based on 6 the same cause of action not only in respect of every matter 7 actually litigated, but also as to every ground of recovery or 8 defense which might have been presented.” Mirin v. Nevada ex 9 rel., Public Service Commission, 547 F.2d 91, 94 (9th Cir. 1976), 10 Cert. denied, 432 U.S. 906, 97 S.Ct. 2952, 53 L.Ed.2d 1079 11 (1977). Furthermore, under the federal rule, “a judgment or 12 order, once rendered, is final for purposes of res judicata until 13 reversed on appeal or modified or set aside in the court of 14 rendition.” Stoll v. Gottlieb 305 U.S. 165, 170 (1938). 15 Given the above caselaw, the Court finds res judicata’s 16 elements satisfied. First, although the legal theory and grounds 17 for recovery regarding Plaintiff’s claim differ from those 18 underlying the Weckwerth Judgment, the two cases share an 19 “identity of claims” because they both concern the warranty of 20 Plaintiff’s transmission. See Hooker v. Simon, No. 1:06-CV- 21 00389, 2010 WL 3516662, at *2 (E.D. Cal. Sept. 7, 2010) 22 (citations omitted). As a result, Plaintiff’s claim is precluded 23 because she could have presented her claim to the Weckwerth 24 court. Id.; See also Stewart v. U.S. Bancorp, 297 F.3d 953, 956 25 (9th Cir. 2002) (“Res judicata, or claim preclusion, prohibits 26 lawsuits on any claims that were raised or could have been raised 27 in a prior action.”). Second, the Weckwerth court gave final 28 approval to the parties’ class action settlement, which “meet[s] 1 the ‘final on the merits’ element of res judicata” and is “as 2 conclusive a bar as a judgment rendered after trial.” Rangel v. 3 PLS Check Cashiers of California, Inc., 833 F.3d 1106, 110 (9th 4 Cir. 2018). In turn, the Weckwerth Judgment has a preclusive 5 effect on the released claims described above—such as 6 Plaintiff’s. Third, because Plaintiff is a member of the 7 Weckwerth class, the parties in this case overlap with those in 8 Weckwerth and Plaintiff is bound by the judgment in that class 9 action. Dosier v. Miami Valley Broadcasting Corp., 656 F.2d 10 1295, 1298 (9th Cir. 1981). 11 Because all three elements are met, the Court agrees with 12 Defendants that res judicata bars Plaintiff’s claim. 13 Furthermore, under federal law, any modification or appeal of 14 this judgment lies with the Weckwerth court. See Stoll v. 15 Gottlieb, 305 U.S. 165 at 170. This conclusion is supported by 16 the fact that: (1) Plaintiff fails to cite any caselaw supporting 17 her proposition that this Court can invalidate another federal 18 district court’s order and judgment approving a class action 19 settlement; and (2) the Weckwerth Judgment’s own language stating 20 “[t]he Parties and Class Members have irrevocably submitted to 21 the exclusive jurisdiction of the [Weckwerth] [c]ourt for any 22 suit, action, proceeding or dispute arising out of the 23 settlement.” See Judgment ¶ 8. As a result, the Court declines 24 to address Plaintiff’s contention that the Weckwerth Judgment 25 contravenes public policy and is accordingly unenforceable. 26 Lastly, because the Court finds res judicata precludes 27 Plaintiff’s claim, the Court finds Defendants’ remaining 12(b)(6) 28 arguments moot and need not address them. nnn nn nnn enn nn nnn en ee no nn nnn nn on ISI IE 1 Accordingly, the Court dismisses Plaintiff’s claim. 2 Dismissal is with prejudice as amendment would be futile. See 3 Gompper v. VISX, Inc., 298 F.3d 893, 898 (Sth Cir. 2002) (finding 4 leave to amend need not be granted when amendment would be 5 futile). 6 Til. ORDER 7 For the reasons set forth above, the Court GRANTS 8 Defendants’ Motion to Dismiss. 9 IT IS SO ORDERED. 10 Dated: November 28, 2022 11 Aa JOHN A. MENDEZ 13 SENIOR UNITED*STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28