Clendenen v. Volkswagen Group of America, Inc. ( 2020 )

1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 NICHOLAS BENIPAYO, et al., Case No. 15-md-02672-CRB 9 Plaintiffs, ORDER GRANTING IN PART AND 10 v. DENYING IN PART MOTION FOR SUMMARY JUDGMENT 11 VOLKSWAGEN GROUP OF AMERICA, INC., et al., 12 Defendants. 13 This case arises from Volkswagen’s evasion of United States and California emissions 14 standards by equipping “clean diesel” vehicles with hidden defeat devices that gamed emissions 15 testing procedures. The majority of the civil suits against Volkswagen were resolved by a pair of 16 settlements (the “Class Settlements”) approved by this Court. Plaintiffs in this case are ten opt- 17 outs bringing state common law and statutory claims against Volkswagen Group of America, Inc. 18 (“Volkswagen America”) and Volkswagen Aktiengesellschaft (“Volkswagen Germany,” 19 collectively, “Volkswagen”). See, e.g. Clendenen Amended Compl. (MDL dkt. 6462) ¶ 3. 20 Volkswagen has moved for summary judgment on Plaintiffs’ Song-Beverly Consumer Warranty 21 Act and Consumers Legal Remedies Act claims. See generally Mot. (Clendenen dkt. 14).1 22 Because Plaintiffs cars were merchantable despite the presence of the defeat devices, 23 Volkswagen’s motion for summary judgment on the Song-Beverly Act claims is granted. At this 24 25 1 A since-resolved technical problem forced Volkswagen to file its motion for summary judgment 26 on the docket for Clendenen v. Volkswagen Group of America, Inc., No. 18-cv-07040-CRB, one of the individual cases at issue here. Other relevant documents were filed in the multi-district 27 litigation docket, In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products 1 stage of the proceedings, there is a genuine issue of material fact over whether the Class 2 Settlements constituted an appropriate correct offer under the CLRA, and Volkswagen has waived 3 its argument that it did not receive proper notice of Plaintiffs’ claims for damages under the 4 CLRA. Volkswagen’s motion for summary judgment on Plaintiffs’ CLRA damages claims is 5 therefore denied. Plaintiffs’ request for injunctive relief under the CLRA is moot, so 6 Volkswagen’s motion for summary judgment on those claims is granted. 7 I. BACKGROUND 8 This Court has previously described the events that are the basis for Plaintiffs’ claims: 9 Over the course of six years, Volkswagen sold nearly 500,000 10 Volkswagen– and Audi-branded TDI “clean diesel” vehicles, which they marketed as being environmentally friendly, fuel efficient, and 11 high performing. Consumers were unaware, however, that Volkswagen had secretly equipped these vehicles with a defeat 12 device that allowed Volkswagen to evade United States Environmental Protection Agency (“EPA”) and California Air 13 Resources Board (“CARB”) emissions test procedures. Specifically, the defeat device produces regulation-compliant results when it 14 senses the vehicle is undergoing testing, but operates a less effective emissions control system when the vehicle is driven under normal 15 circumstances. It was only by using the defeat device that Volkswagen was able to obtain Certificates of Conformity from 16 EPA and Executive Orders from CARB for its TDI diesel engine vehicles. In reality, these vehicles emit nitrogen oxides (“NOx”) at a 17 factor of up to 40 times over the permitted limit. In re: Volkswagen “Clean Diesel” Mktg., Sales Practices, & Prod. Liab. Litig., No. 15-md-02672- 18 CRB (JSC), 2016 WL 6248426, at *1 (N.D. Cal. Oct. 25, 2016). The scandal led to numerous 19 government actions and over a thousand civil lawsuits, which were consolidated before this Court 20 by the Judicial Panel on Multidistrict Litigation. Id. at *2. 21 Several of the government actions resulted in guilty pleas, consent orders, and consent 22 decrees relevant here. Volkswagen’s Federal Trade Commission Consent Order enjoins it from 23 selling, leasing, marketing, or advertising any vehicle with a defeat device, Partial Stipulated 24 Order for Permanent Injunction and Monetary Judgment (“FTC Consent Order”) (MDL dkt. 2104) 25 at 11, and its First and Second Partial Consent Decrees with the EPA prohibit it from selling TDI 26 vehicles without an approved emissions modification (AEM) and disclosures approved by the 27 1 B § 7.2.4; Second Partial Consent Decree (MDL dkt. 3228-1) App’x A § 11.2.3. The Plea 2 Agreement that resolved the criminal case against Volkswagen promised that neither it, its 3 officers, directors, employees, or agents would “make any public statement” contradicting its 4 guilty plea. Mot. Ex. DD (Clendenen dkt. 14-32) ¶ 14.A. 5 The bulk of the civil actions were resolved in two settlements (one concerning 2.0-liter 6 TDI vehicles and another for 3.0-liter TDI vehicles) approved by this Court. See generally In re: 7 Volkswagen, 2016 WL 6248426; 3.0-Liter Class Action Settlement Approval Order (MDL 8 dkt. 3229). The 2.0-Liter Class Settlement offered the owners of TDI diesel vehicles their choice 9 of two remedies. Volkswagen would either buy their cars back at the pre-defeat device value or 10 fix their cars with an emissions modification. In re: Volkswagen “Clean Diesel” Mktg., Sales 11 Practices, & Prod. Liab. Litig., 2016 WL 6248426, at *4. Lessees similarly had two options. 12 Volkswagen would let them cancel their leases with no penalty or fix their vehicle. Id. Both 13 owners and lessees were entitled to cash restitution on top of their choice of remedy. Id. Former 14 owners who sold their vehicle before June 28, 2016, were entitled to at least $2,550 in cash 15 restitution. Amended Consumer Class Action Settlement Agreement Ex. 3 (MDL dkt. 1685-3) at 16 8–9. The 3.0-Liter Class Settlement offered a similar deal. All owners had the option of receiving 17 a free repair, an extended emissions warranty, and cash restitution. See generally Amended 3.0- 18 Liter Class Action Settlement Agreement Ex. 2 (MDL dkt. 2894-2). Both settlements required 19 class members to release all claims arising from the emissions scandal. In re: Volkswagen “Clean 20 Diesel” Mktg., Sales Practices, & Prod. Liab. Litig., 2016 WL 6248426, at *25; 3.0-Liter Class 21 Action Settlement Approval Order at 13–14. Volkswagen has allowed opt-outs to participate in 22 the Class Settlements despite having opted out. Monahan Decl. (Clendenen dkt. 14-2) ¶ 60. 23 Plaintiffs Richard and Virginia Ortiz currently own a 2.0-liter TDI diesel vehicle. 24 Mot. Ex. G (Clendenen dkt. 14-9). Plaintiff Scott Salzer used to own a 2.0-liter TDI diesel 25 vehicle. Mot. Ex. S (Clendenen dkt. 14-21) at 82:19–21, 85:10–21. Plaintiff Julia Robertson 26 leased a 2.0-liter TDI vehicle for three years, beginning in September 2013. Mot. Ex. N 27 (Clendenen dkt. 14-16). Plaintiffs Byron Clendenen, Kenneth and Maria Coon, and Luke and 1 Mot. Ex. C (Clendenen dkt. 14-5); Mot. Ex. T (Clendenen dkt. 14-22). Plaintiff Timothy Riley 2 used to own a 3.0-liter TDI diesel vehicle. Mot. Ex. M (Clendenen dkt. 14-15). 3 All ten Plaintiffs opted out of the applicable Class Settlement. See Mot. Exs. W, X, Y, Z, 4 AA, BB, and CC (Plaintiffs’ opt-out notices) (Clendenen dkt. 14-25–14-31). They have each 5 brought fraud claims and claims under California’s Song-Beverly Act. See, e.g. Clendenen 6 Amended Compl. Every plaintiff but Riley has also brought a claim under the CLRA. See, e.g. 7 id.; Mot. at 3 n.1. Volkswagen has moved for summary judgment on just the statutory claims. 8 See generally Mot. 9 II. LEGAL STANDARD 10 Summary judgment is appropriate “if the movant shows that there is no genuine dispute as 11 to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 12 P. 56(a). A fact is material if it could affect the outcome of the case “under the governing law.” 13 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of material fact is genuine 14 if the evidence, viewed in the light most favorable to the nonmoving party, “is such that a 15 reasonable jury could return a verdict for the nonmoving party.” Id. 16 The party moving for summary judgment bears the initial burden of identifying those 17 portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue 18 of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party will have 19 the burden of proof at trial, it must affirmatively show that no reasonable jury could find other 20 than in the moving party’s favor. Id. at 331 (Brennan, J., dissenting). 21 Once the moving party meets its initial burden, the nonmoving party must “set forth 22 specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 250 (internal 23 quotation marks and citations omitted). Because the court has no obligation to “scour the record 24 in search of a genuine issue of triable fact,” the nonmoving party must “identify with reasonable 25 particularity the evidence that precludes summary judgment.” Kennan v. Allan, 91 F.3d 1275, 26 1279 (9th Cir. 1996). If the nonmoving party fails to raise a genuine issue as to any material fact, 27 the moving party is entitled to judgment as a matter of law. Anderson, 477 U.S. at 250. In 1 assess the credibility of witnesses, or resolve issues of fact. Id. at 249. 2 III. DISCUSSION 3 A. Song-Beverly Consumer Warranty Act 4 The Song-Beverly Act provides consumers with a right of action for breaches of the 5 implied warranty of merchantability, which guarantees that goods will “(1) [p]ass without 6 objection in the trade under the contract description,” “(2) [a]re fit for the ordinary purposes for 7 which such goods are used,” “(3) [a]re adequately contained, packaged, and labeled,” and 8 “(4) [c]onform to the promises or affirmations of fact made on the container or label.” Cal. Civ. 9 Code § 1791.1(a), (d). “The core test of merchantability is fitness for the ordinary purpose for 10 which such goods are used.” Isip v. Mercedes-Benz USA, LLC, 155 Cal. App. 4th 19, 26 (Cal. 11 Ct. App. 2007). Simply showing that a product “did not precisely fulfill the expectation of the 12 buyer” does not satisfy this standard. Am. Suzuki Motor Corp. v. Super. Ct., 37 Cal. App. 4th 13 1291, 1296 (Cal. Ct. App. 1995). The implied warranty of merchantability “provides for a 14 minimum level of quality,” and is breached only when goods lack “even the most basic degree of 15 fitness for ordinary use.” Birdsong v. Apple, Inc., 590 F.3d 955, 958 (9th Cir. 2009) (internal 16 citations and quotation marks omitted). 17 As applied to automobiles, the implied warranty of merchantability will be breached by “a 18 defect that is so basic it renders the vehicle unfit for its ordinary purpose of providing 19 transportation.” Am. Suzuki, 37 Cal. App. 4th at 1296. This does not mean that an automobile is 20 merchantable so long as it is capable of “provid[ing] transportation from point A to point B.” Isip, 21 155 Cal. App. 4th at 27. Vehicles must also be “in safe condition and substantially free of 22 defects.” Id. Defects that render a car unsafe or particularly unpleasant to drive, but not 23 inoperable, may nonetheless violate the warranty of merchantability. See id. (“A vehicle that 24 smells, lurches, clanks, and emits smoke over an extended period of time is not fit for its intended 25 purpose.”); Brand v. Hyundai Motor Am., 226 Cal. App. 4th 1538, 1547 (Cal. Ct. App. 2014) 26 (jury could reasonably infer that the implied warranty of merchantability was violated by “a 27 vehicle sunroof that opens and closes on its own” because that defect “creates a substantial safety 1 hazard”). 2 There is no genuine dispute that Plaintiffs’ cars were merchantable. Plaintiffs claim their 3 vehicles were defective because they contained defeat devices that allowed Volkswagen to evade 4 California and U.S. emissions standards. Opp’n (Clenenden dkt. 24) at 9–10. But the defeat 5 devices and increased emissions did not render Plaintiffs’ cars inoperable, pose an immediate 6 danger to Plaintiffs, their passengers, or anyone else, or affect the cars’ performance in any way 7 Plaintiffs were aware of before the emissions scandal came to light. See Mot. Ex B (Clendenen 8 dkt. 14-4) at 297:23–298:10, 298:14–22; Ex. E (Clendenen dkt. 14-7) at 70:5–21, 108:13–18, 9 282:13–23; Ex. I (Clendenen dkt. 14-11) at 82:4–24; Ex. L (Clendenen dkt. 14-14) at 159:6, 10 160:17; Ex. P (Clendenen dkt. 14-18) at 72:21–25, 227:4, 256:16–21; Ex. S at 82:8–12, 125:25– 11 126:12; Ex. U (Clendenen dkt. 14-23) at 160:11–22, 178:7–16, 247:19–23; Ex. V (Clendenen 12 dkt. 14-24) at 211:1–3, 261:20–22, 265:17–20. The defects in this case are therefore unlike those 13 that previous courts have found sufficient to render a car unmerchantable. See, e.g. Brand, 226 14 Cal. App. 4th at 1547 (defective sunroof increased the danger of a crash); Isip, 155 Cal. App. 4th 15 at 27 (car was unmerchantable because it stank, lurched, and emitted smoke); Salas v. Toyota 16 Motor Sales, U.S.A., Inc., No. CV 15-8629 FMO (EX), 2017 WL 11247885, at *4 (C.D. Cal. 17 Sept. 29, 2017) (persistent “stench” could have rendered car unmerchantable). The defeat device 18 and higher emissions are akin to a defect which required more frequent refueling but did not 19 otherwise “implicate the [car’s] operability.” Troup v. Toyota Motor Corp., 545 F. App’x 668, 20 669 (9th Cir. 2013). The Ninth Circuit has held in an unpublished disposition that that defect, 21 which “did not compromise the vehicle’s safety, render it inoperable, or drastically reduce its 22 mileage range,” did not constitute a breach of the warranty of merchantability as a matter of law. 23 Id. 24 Plaintiffs’ arguments to the contrary are not well-taken. First, they argue that their “cars 25 did not function as clean-diesel, low emissions vehicles, which was their ordinary use.” Opp’n at 26 10–11. This defines the relevant “ordinary use” too specifically, especially in light of caselaw 27 holding that a car’s ordinary use is transportation. See Am. Suzuki, 37 Cal. App. 4th at 1296. 1 goods “[c]onform to the promises or affirmations of fact made on the container or label,” Cal. Civ. 2 Code § 1791.1(a)(4), and argue that “[t]he statements made in the labels provided on the vehicles 3 regarding emissions were . . . patently false.” Opp’n at 11. But the heart of the merchantability 4 inquiry is fitness for use, not conformity to labeling, and courts have held that mislabeling alone 5 cannot render a product unmerchantable. See, e.g. Thomas v. Costco Wholesale Corp., No. 12- 6 CV-02908-BLF, 2014 WL 5872808, at *3 (N.D. Cal. Nov. 12, 2014) (“Mislabeling of a product is 7 not the sort of ‘fundamental defect’ that the implied warranty of merchantability is designed to 8 protect against.”). 9 Courts have similarly rejected arguments akin to Plaintiffs’ theory that a car that does not 10 meet emissions standards set by law is by definition unmerchantable or necessarily fails to meet a 11 “minimum level of quality.” Opp’n at 11; see also Thomas, 2014 WL 5872808, at *3 (rejecting 12 argument that a product was not merchantable because it “could not be legally sold or held”); 13 Swearingen v. Amazon Pres. Partners, Inc., No. 13-CV-04402-WHO, 2014 WL 3934000, at *1 14 (N.D. Cal. Aug. 11, 2014) (holding allegations that a product was “illegal” insufficient to allege 15 that it “lack[ed] even the most basic degree of fitness for ordinary use”). Plaintiffs attempt to 16 distinguish these cases by pointing out that they involved food products. Opp’n at 8–9. But they 17 do not explain why the principle that regulatory violations do not necessarily establish 18 unmerchantability should not apply more generally.2 A product may be used even if it violates 19 regulatory requirements. Given the merchantability inquiry’s focus on fitness for ordinary use, it 20 makes sense that a regulatory violation is not dispositive of merchantability. This does not mean 21 that a legal violation could never make an automobile unmerchantable. If, for example, a car 22 could not legally be driven because it was not in compliance with applicable regulations, it would 23 be effectively inoperable and might therefore be unmerchantable. But that was not the case here. 24 Even after the defeat devices came to light, Plaintiffs’ vehicles remained legal to drive. Mot. 25 Ex. ZZ (dkt. 14-54) at 2. 26 2 At least one court has reached a similar result in the automobile context. See Amata v. Toyota 27 Motor Sales, U.S.A., Inc., No. EDCV 12-00168-VAP (SPx), 2013 WL 12248140, at *7 (C.D. Cal. 1 Finally, Plaintiffs argue their cars were not “safe” because they emitted increased levels of 2 chemicals harmful to human health. Id. at 11. Previous cases finding that unsafe defects rendered 3 a car unmerchantable have involved an increased risk of immediate injury, not generalized 4 environmental harms. See, e.g. Brand, 226 Cal. App. 4th at 1547. That makes sense. A car that 5 cannot be driven without an unreasonable risk of preventable injury may not safely transport the 6 driver to their destination and is likely not to be driven at all. It thus implicates the core question 7 regarding a vehicle’s merchantability: Whether or not the car provides reliable transportation. 8 Increased emissions do not implicate the ability to provide transportation. 9 Because there is no genuine dispute that the Plaintiffs’ cars were merchantable, 10 Volkswagen’s motion for summary judgment as to Plaintiffs’ Song-Beverly Act claims is granted. 11 It is therefore unnecessary to decide whether Plaintiffs are entitled to revocation under that law. 12 See Mot. at 20–22, Opp’n at 12–14. 13 B. Consumers Legal Remedies Act 14 Volkswagen argues that it should be granted summary judgment on Plaintiffs’ claims for 15 damages under the CLRA because it made each of them an appropriate correction offer, Mot. at 16 25–29, and Plaintiffs failed to provide the required statutory notice, id. at 22–24. It also argues 17 Plaintiffs’ claims for injunctive relief under the CLRA must be dismissed because Plaintiffs’ lack 18 Article III standing to seek injunctive relief, the request for injunctive relief is moot, and Plaintiffs 19 have an adequate remedy at law. Id. at 29–30. 20 1. Correction Offer 21 California Civil Code § 1782(b) provides that “no action for damages may be maintained 22 under Section 1780 if an appropriate correction, repair, replacement, or other remedy is given, or 23 agreed to be given within a reasonable time, to the consumer within 30 days after receipt of the 24 notice.” Volkswagen argues that the Class Settlements constituted an appropriate correction offer 25 to each of the Plaintiffs,3 foreclosing damages claims under the CLRA.4 26 3 Besides Riley, who has not brought a CLRA claim. Mot. at 13 n.6. 27 4 Volkswagen also believes the Class Settlements satisfy the requirements of California Civil 1 As a preliminary matter, Plaintiffs assert that under California Civil Code § 1784, 2 Volkswagen can only benefit from a correction offer if the alleged CLRA violations were “not 3 intentional and resulted from a bona fide error.” Opp’n at 26. The problem with this theory is that 4 section 1784 announces a separate defense with different requirements from the section 1782 5 defense Volkswagen is asserting.5 Compare Cal. Civ. Code 1784, with Cal. Civ. Code 1782(b). It 6 does not announce additional requirements for the section 1782 defense. This is confirmed by the 7 fact that cases applying the section 1782 defense have not required a showing of good faith. See 8 generally, e.g. Benson v. Southern Cal. Auto Sales, Inc., 239 Cal. App. 4th 1198 (Cal. Ct. App. 9 2015). 10 The parties also disagree over whose place it is to determine that an appropriate correction 11 offer has been made. Plaintiffs seem to suggest that if there is any dispute as to the 12 “appropriateness” of an offer, that determination must be made by a jury. Opp’n at 23–24. But a 13 California Court of Appeals decision holds that “the determination of appropriateness of a 14 correction offer under the CLRA should be left to the trial court’s discretion.” Benson, 239 Cal. 15 App. 4th at 1207. At least one unpublished California appellate decision has cited this language as 16 establishing that this is “a legal question that must be decided by the trial court.” Duran v. 17 Quantum Auto Sales, Inc., No. G052968, 2017 WL 6333871, at *17 (Cal. Ct. App. Dec. 12, 18 2017). Plaintiffs’ authorities, on the other hand, are orders on motions to dismiss CLRA damages 19 claims under section 1782(b). They establish only that the court could not determine whether an 20 appropriate correction had been made at the pleading stage. See In re MacBook Keyboard Litig., 21 No. 5:18-cv-02813-EJD, 2019 WL 6465285, at *10 (N.D. Cal. Dec. 2, 2019); Luong v. Subaru of 22 Am., Inc., No. 17-cv-03160-YGR, 2018 WL 2047646, at *6 (N.D. Cal. May 2, 2018); In re 23 Toyota Motor Corp. Hybrid Brake Mktg., Sales, Practices and Prods. Liab. Litig., 890 F. Supp. 2d 24 1210, 1218 (C.D. Cal. 2011). 25 The dispositive question, then, is whether the Class Settlements constitute an appropriate 26 27 5 Volkswagen’s motion for summary judgment does cite section 1784 once. Mot. at 25. 1 correction offer.6 This question presents a genuine dispute of material fact which the Court cannot 2 resolve at this stage of the litigation. Plaintiffs make three arguments that the Class Settlements 3 were not appropriate correct offers. First they point out that the Class Settlements would have 4 required them to release other, non-CLRA claims. Opp’n at 24–25. Some (but not all) courts 5 have held that “a correction offer cannot require the consumer to release claims that would not 6 otherwise be barred under section 1782.” See, e.g. Valdez v. Seidner-Miller, Inc., 33 Cal. App. 7 5th 600, 615 (Cal. Ct. App. 2019); but see Benson, 239 Cal. App. 4th at 1211 (holding that trial 8 court did not abuse its discretion by holding that a correction offer was appropriate even though it 9 required plaintiff to release “nine different versions of the same cause of action”). Second, 10 Plaintiffs suggest that the Class Settlements were inadequate because “each consumer would 11 receive only a portion of their vehicle purchase price.” Opp’n at 25. Third, Plaintiffs argued that 12 the Class Settlements offered remedies “subject to Volkswagen’s unilateral determination based 13 on subjective criteria.” The Court cannot evaluate these points without weighing the evidence and 14 determining issues of fact, which would be inappropriate on a motion for summary judgment. 15 Anderson, 477 U.S. at 250. 16 However, given Benson’s direction that this issue should be decided by the Court, it 17 appears that it would be appropriate for the Court to determine whether the Class Settlements 18 constituted appropriate CLRA correction offers after the close of evidence and with the benefit of 19 an advisory jury verdict, pursuant to Federal Rule of Civil Procedure 52(a)(1). 20 2. Notice 21 Plaintiffs who bring a claim for damages under the CLRA must first provide the defendant 22 with notice of the alleged violation, and “[d]emand that the [defendant] correct, repair, replace, or 23 otherwise rectify the goods or services alleged to be in violation” of the CLRA. Cal. Civ. Code 24 § 1782(a). Notice must “be in writing and shall be sent by certified or registered mail, return 25 receipt requested, to the place where the transaction occurred or to the [defendant’s] principal 26 27 1 place of business within California” at least thirty days before the claim for damages is filed. Id. 2 § 1782(a). 3 The Court need not decide whether Plaintiffs failed to satisfy this requirement, as 4 Volkswagen argues, because Volkswagen has waived its objection to the sufficiency of notice. 5 Most courts agree that challenges to the sufficiency of section 1782 notice can be waived when the 6 defendants explicitly indicate they recognize the relevant communication as section 1782(a) 7 notice, despite any ostensible deficiencies. See, e.g. Outboard Marine Corp.v. Sup. Ct., 52 Cal. 8 App. 3d 30, 41 (Cal. Ct. App. 1975) (notice waived by communication stating that the defendant 9 was treating the letter it had received “as a preliminary notice and demand under California Civil 10 Code 1782a”), abrogated by statute on other grounds as stated in Flores v. Southcoast Auto. 11 Liquidators, Inc., 17 Cal. App. 5th 841, 851 (Cal. Ct. App. 2017); Jones v. Porsche Cars N. Am., 12 Inc., No. CV 15-5766-GW(SSX), 2015 WL 11995257, at *4 (C.D. Cal. Oct. 15, 2015) (notice 13 waived by communication stating that defendants had received letter “that purports to serve as a 14 notice and demand under the [CLRA]”); but see Shein v. Canon U.S.A., Inc., No. CV 08-07323 15 CAS (Ex), 2009 WL 3109721, at *6 (C.D. Cal. Sept. 22, 2009) (holding that objections to the 16 adequacy of CLRA notice cannot be waived). 17 That is exactly what happened here. According to its own exhibits, Volkswagen responded 18 to the Plaintiffs’ CLRA letters with a CLRA correction offer. Mot. Exs. NN, OO, PP (dkt. 14-42, 19 14-43, 14-44). None of those responses stated that Volkswagen considered the CLRA letters 20 inadequate. See id. This undisputed record evidence shows that Volkswagen treated Plaintiffs’ 21 letters as CLRA notice and gave Plaintiffs no reason to believe it would later challenge the 22 sufficiency of that notice. This response meets Outboard Marine’s standard of “conduct so 23 inconsistent with the intent to enforce the right in question as to induce a reasonable belief it has 24 been relinquished.” 52 Cal. App. 3d at 41. 25 Volkswagen’s failure to raise its objection to the sufficiency of notice in its reply to 26 Plaintiffs’ CLRA letters is particularly troubling because if it had raised the issue sooner, Plaintiffs 27 could have re-noticed Volkswagen immediately, well before this case went to trial. By waiting to 1 inadequate notice, dismissal with leave to amend after proper notice is sent, would have required a 2 continuance of trial and inconvenient delays for the parties and the Court.7 Morgan v. AT&T 3 Wireless Services, Inc., 177 Cal. App. 4th 1235, 1261 (Cal Ct. App. 2009) (inadequate CLRA 4 notice requires only dismissal of the CLRA damages claim, without prejudice, “until 30 days or 5 more after the plaintiff complies with the notice requirements”). 6 3. Injunctive Relief 7 “Claims for injunctive relief become moot when the challenged activity ceases if 8 subsequent events have made it clear that the alleged violations could not reasonably be expected 9 to recur.” Ruiz v. City of Santa Maria, 160 F.3d 543, 549 (9th Cir. 1998) (internal quotation 10 marks and citations omitted). That is the case here. Plaintiffs request an injunction directing 11 Volkswagen to “disclose fully, prior to the sale or lease, the inherent engine defects in vehicles 12 equipped with the TDI engine with a defeat device . . . and desist from selling these vehicles with 13 the foregoing pre-sale disclosure” and “to prevent Volkswagen from refusing to acknowledge its 14 scheme to intentionally defraud consumers, including Plaintiff[s], and the California CARB.” 15 Clendenen Amended Compl. ¶ 151. This injunction is entirely unnecessary in light of 16 Volkswagen’s FTC Consent Order, First and Second Partial Consent Decrees with the EPA, and 17 Plea Agreement. Those orders, decrees, and agreements already prevent Volkswagen from 18 engaging in such misbehavior. See FTC Consent Order at 11; First Partial Consent Decree App’x 19 A § 7.2.3 & 7.2.4, App’x B § 7.2.4; Second Partial Consent Decree App’x A § 11.2.3; Mot. 20 7 Volkswagen argues that inadequate notice requires dismissal with prejudice, citing a line of 21 authority tracing back to Outboard Marine’s direction that section 1782(a)’s requirements be given “literal application.” See Trabakoolas v. Watts Water Techs., Inc., No. 12-CV-01172-YGR, 2012 22 WL 2792441, at *7 (N.D. Cal. July 9, 2012) (collecting cases). Some cases conclude that a “literal application” of section 1782(a) requires dismissal with prejudice when the notice 23 requirements are not satisfied. Id. But after Morgan, the weight of persuasive precedent, including in this district, takes that case’s approach of dismissal without prejudice. See, e.g. 24 Romero v. Flowers Bakeries, LLC, No. 14-cv-05189-BLF, 2015 WL 2125004, at *8 (N.D. Cal. May 6, 2015) (“Courts in this District have determined that it is consistent with California law and 25 with the purposes of the statute to dismiss a CLRA claim for damages without prejudice to amending once a plaintiff can demonstrate compliance with the notice requirements.”). And it is 26 not at all clear that Outboard Marine requires dismissal with prejudice. The CLRA claims in that case were not dismissed, because the defendant waived its challenge to notice. Outboard Marine, 27 52 Cal. App. 3d at 41. It may well be that courts have read too much into Outboard Marine’s 1 || Ex.DD414.A. 2 Plaintiffs only reply® is that “Volkswagen has [not] completely and definitely addressed 3 || the defects identified in plaintiffs’ CLRA claims, and that the AEM [does not] cure[ | the defects 4 || in the vehicles.” Opp’n at 29. They offer no evidence or explanation for this claim, and thus fail 5 || to meet their burden of showing a genuine issue of material fact. Anderson, 477 U.S. at 250. 6 Because mootness is an adequate reason to grant Volkswagen summary judgment on 7 || Plaintiffs’ request for mjunctive relief, it is unnecessary to consider the parties’ other arguments 8 || on this issue. || Iv. CONCLUSION 10 For the foregoing reasons, Volkswagen’s motion for summary judgment is denied in part and granted in part. IT IS SO ORDERED. cE ,O 13 Dated: February 4, 2019 44 CHARLES R. BREYER United States District Judge 15 16 17 Oo Z 18 19 20 21 22 23 24 25 26 27 8 To the extent Plaintiffs rely on Louis Freeh’s report, and its claims that Volkswagen is misleadingly selling its cars as “certified pre-owned,” see Opp’n at 30, that report is inadmissible 3g || and this Court has already rejected the relevance of such claims to this proceeding, Order on Discovery Letter Brief (MDL dkt. 6973) at 2.