Margie Daniel v. Ford Motor Company

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARGIE DANIEL; MARY HAUSER; No. 13-16476
DONNA GLASS; ANDREA DUARTE,
individually and on behalf of a class D.C. No.
of similarly situated individuals, 2:11-cv-02890-
Plaintiffs-Appellants, WBS-EFB
v.
OPINION
FORD MOTOR COMPANY, a Delaware
corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, Senior District Judge, Presiding
Argued and Submitted
October 22, 2015—San Francisco, California
Filed December 2, 2015
Before: Stephen Reinhardt and Michael Daly Hawkins,
Circuit Judges and Donald W. Molloy,* Senior District
Judge.
Opinion by Judge Molloy
*
The Honorable Donald W. Molloy, Senior District Judge for the U.S.
District Court for the District of Montana, sitting by designation.
2 DANIEL V. FORD MOTOR CO.
SUMMARY**
Warranty
The panel reversed the district court’s summary judgment
in favor of Ford Motor Company in a putative class action in
which plaintiffs alleged that Ford breached implied and
express warranties and committed fraud in the sale of model
year 2005 to 2011 Ford Focus vehicles containing rear
suspension defects.
The panel held that the district court erred when it
declined to follow a California appellate decision, Mexia v.
Rinker Boat Co., 95 Cal. Rptr. 3d 285, 295 (Ct. App. 2009)
(holding that “latent defects” may breach the implied
warranty even when they are not discovered within the
implied warranty’s duration), and reversed the summary
judgment as to the California Song-Beverly Consumer
Warranty Act claims of plaintiffs Hauser, Glass, and Duarte.
Concerning plaintiffs’ claim of breach of express
warranty under the California Commercial Code, the panel
held that given the ambiguous terms of Ford’s express
warranty, the warranty must be construed to guarantee both
manufacturing and design defects. The panel reversed the
district court’s order granting summary judgment as the
breach of express warranty claims of plaintiffs Daniel and
Duarte.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
DANIEL V. FORD MOTOR CO. 3
The panel held that plaintiffs created a genuine issue of
material fact as to whether they actually relied on Ford’s
omissions in purchasing the Focus, and reversed the district
court’s summary judgment on their claims under California’s
Consumer Legal Remedies Act and Unfair Competition Law.
Finally, the panel declined to address issues not addressed
by the district court. Because the panel reversed plaintiffs’
implied and express warranty claims, the panel also reversed
the district court’s order granting summary judgment as to the
Magnuson-Moss Warranty Act claims. In light of the
reversal, the panel instructed the district court to reconsider
its denial of plaintiffs’ motion for class certification.
COUNSEL
Eric Grant (argued), John B. Thomas, and Kelsey McDowell,
Hicks Thomas LLP, Sacramento, California; J. Allen Carney
and Tiffany Wyatt Oldham, Carney Bates & Pulliam PLLC,
Little Rock, Arkansas, for Plaintiffs-Appellants.
John M. Thomas (argued) and Krista L. Lenart, Dykema
Gossett PLLC, Ann Arbor, Michigan, for Defendant-
Appellee.
4 DANIEL V. FORD MOTOR CO.
OPINION
MOLLOY, Senior District Judge:
The focus of this case is whether Ford Motor Company
sold the plaintiffs a pig in the poke1 when each of them
purchased a Ford Focus. The answer to that question is
complicated by a dispute over the interpretation of the Song-
Beverly Consumer Warranty Act by the California Court of
Appeal and whether that court’s decision is binding on
federal courts in diversity cases. If it is, the consequence
negatively impacts the trial court’s determination of the
Magnuson-Moss Warranty Act in this case. There is also a
concern about the warranties, focused on whether the
language written by Ford is ambiguous. Finally, there is the
question of whether the record here can be construed to show
reliance in favor of the plaintiffs when they admittedly did
not read available materials about the Ford Focus. The
district court granted summary judgment in favor of Ford.
We reverse.
I. Background
The plaintiffs, Margie Daniel, Mary Hauser, Donna Glass,
and Andrea Duarte2 (collectively “Plaintiffs”), brought this
class action against Ford, alleging that Ford breached implied
1
The English colloquialisms such as “turn out to be a pig in a poke” or
“buy a pig in a poke” mean that something is sold or bought without the
buyer knowing its true nature or value, especially when buying without
inspecting the item beforehand.
2
A fifth plaintiff, Robert McCabe, withdrew as a named plaintiff, and
Plaintiffs are not pursuing his claims.
DANIEL V. FORD MOTOR CO. 5
and express warranties and committed fraud in the sale of
model year 2005 to 2011 Ford Focus vehicles containing rear
suspension defects. Plaintiffs purchased their Ford Focus
vehicles from authorized Ford dealerships in California.
With each purchase, Plaintiffs received a New Vehicle
Limited Warranty. Prior to purchase, they did not research
the Focus or view brochures, websites, or advertisements
about the Focus. Nor did they read the warranty,
maintenance, or owner’s guides that came with the new
vehicles prior to purchasing them. However, Plaintiffs did
speak to authorized Ford dealership sales representatives
about the Focus when they made their purchases. After
purchase, Plaintiffs’ Focuses required new rear tires for the
first time between 12,086 and 20,723 miles.
Plaintiffs allege that the Focus has a rear suspension
“alignment/geometry” defect that leads to premature tire
wear, which in turn leads to safety hazards such as decreased
control in handling, steering, stability, and braking, the threat
of catastrophic tire failure, and drifting while driving on wet
or snow-covered roads. Ford allegedly knew or should have
known about the defect through pre-release testing data,
consumer complaints to Ford dealerships, testing conducted
in response to those complaints, aggregate data from Ford’s
dealerships, and from other internal sources. Plaintiffs allege
Ford had a duty to disclose the defect but failed to do so at the
time of sale. Plaintiffs further allege that, had they known
about the defect, they would not have purchased the Focus.
Plaintiffs instituted this putative class action against Ford
on November 2, 2011, asserting five claims: (1) violation of
California’s Consumers Legal Remedies Act, Cal Civ. Code
§§ 1750–1784; (2) violation of California’s Unfair
Competition Law, Cal. Bus. & Prof. Code §§ 17200–17210;
6 DANIEL V. FORD MOTOR CO.
(3) breach of implied warranty under California’s Song-
Beverly Consumer Warranty Act, Cal. Civ. Code
§§ 1790–1795.8; (4) breach of warranty under the Magnuson-
Moss Warranty Act, 15 U.S.C. §§ 2301–2312; and (5) breach
of express warranty under Cal. Com. Code § 2313.
After Plaintiffs moved to certify a class defined as “[a]ll
individuals who purchased or leased any 2005 through 2011
Ford Focus vehicle in California and who currently reside in
the United States,” Ford moved for summary judgment. First,
the district court granted summary judgment on Plaintiffs’
Consumers Legal Remedies Act and Unfair Competition Law
claims because the court concluded that Plaintiffs failed to
show reliance. Second, the district court granted summary
judgment on the Song-Beverly Consumer Warranty Act
claims of Plaintiffs Hauser, Glass, and Duarte because the
court concluded that they failed to present evidence that their
vehicles became unmerchantable within the duration of the
implied warranty. Third, the district court granted summary
judgment on the breach of express warranty claims of
Plaintiffs Daniel and Duarte because the court concluded that
the New Vehicle Limited Warranty did not cover the alleged
design defect. Finally, the district court granted summary
judgment on Plaintiffs’ Magnuson-Moss Warranty Act claims
because those claims depend on Plaintiffs’ warranty claims.
The district court also denied Plaintiffs’ motion for class
certification. In accordance with Federal Rule of Civil
Procedure 54(b), the district court entered final judgment.
Plaintiffs timely appealed.
II. Discussion
We have jurisdiction pursuant to 28 U.S.C. § 1291. “We
review orders granting summary judgment de novo.” Clevo
DANIEL V. FORD MOTOR CO. 7
Co. v. Hecny Transp., Inc., 715 F.3d 1189, 1193 (9th Cir.
2013). We apply “the same principles as the district court:
whether, with the evidence viewed in the light most favorable
to the non-moving party, there are no genuine issues of
material fact, so that the moving party is entitled to a
judgment as a matter of law.” Id. (quoting Bamonte v. City
of Mesa, 598 F.3d 1217, 1220 (9th Cir. 2010)).
Plaintiffs raise three issues on appeal: (1) whether
summary judgment was improper because the district court
declined to follow a California appellate court decision that
held that “latent defects” may breach the implied warranty
even when they are not discovered within the implied
warranty’s duration; (2) whether summary judgment was
improper because the district court interpreted the language
in Ford’s express warranty that specifically references defects
“introduced into vehicles during the design . . . process[]” to
exclude design defects; and (3) whether summary judgment
was improper because the district court did not credit
dealership omission evidence that Plaintiffs submitted to
establish reliance. We address each in turn.
A. Breach of Implied Warranty under the Song-Beverly
Consumer Warranty Act
Pursuant to the Song-Beverly Consumer Warranty Act,
“every sale of consumer goods that are sold at retail in this
state shall be accompanied by the manufacturer’s and the
retail seller’s implied warranty that the goods are
merchantable.” Cal. Civ. Code § 1792. Pertinent to this
appeal, the Act contains a one-year durational limitation:
The duration of the implied warranty of
merchantability and where present the implied
8 DANIEL V. FORD MOTOR CO.
warranty of fitness shall be coextensive in
duration with an express warranty which
accompanies the consumer goods, provided
the duration of the express warranty is
reasonable; but in no event shall such implied
warranty have a duration of less than 60 days
nor more than one year following the sale of
new consumer goods to a retail buyer. Where
no duration for an express warranty is stated
with respect to consumer goods, or parts
thereof, the duration of the implied warranty
shall be the maximum period prescribed
above.
Cal. Civ. Code § 1791.1(c) (emphasis added). Yet the
California Court of Appeal held in Mexia v. Rinker Boat Co.
that “[t]here is nothing that suggests a requirement that the
purchaser discover and report to the seller a latent defect
within that time period.” 95 Cal. Rptr. 3d 285, 295 (Ct. App.
2009) (emphasis added).
“We ‘must follow the decision of the intermediate
appellate courts of the state unless there is convincing
evidence that the highest court of the state would decide
differently.’” In re Schwarzkopf, 626 F.3d 1032, 1038 (9th
Cir. 2010) (quoting Owen ex. rel Owen v. United States,
713 F.2d 1461, 1464 (9th Cir. 1983)). Here, there is not
convincing evidence that the California Supreme Court would
decide the latent defect discovery issue that was presented in
Mexia differently. The California Supreme Court denied the
Mexia defendants’ petition for review and denied a non-
party’s request for “depublication” of the opinion. See
Appellate Courts Case Information, The Judicial Branch of
California, http://appellatecases.courtinfo.ca.gov/search/case/
DANIEL V. FORD MOTOR CO. 9
disposition.cfm?dist=0&doc_id=1914874&doc_no=S174901
(last visited Oct. 28, 2015). No published California Court of
Appeal opinion has addressed or rejected the Mexia holding.
Two unpublished decisions reiterated the one-year duration
set forth in § 1791.1, but neither cited Mexia. Balakian v.
Mercedes-Benz USA, LLC, No. F060461, 2011 WL 6826723,
at *7 n.8 (Cal. Ct. App. Dec. 29, 2011) (unpublished); Larsen
v. Nissan N. Am., Inc., No. A121838, 2009 WL 1766797, at
*6 (Cal. Ct. App. June 23, 2009) (unpublished). The two
unpublished decisions that have referenced the Mexia rule did
so without disapproval. Clark v. BMW of N. Am., LLC,
B248593, 2014 WL 3907922, at *6 (Cal. Ct. App. Aug. 12,
2014) (unpublished); Lugo v. Good Guys Auto Sales, Inc.,
D061620, 2013 WL 5411650, at *7 (Cal. Ct. App. Sept. 27,
2013) (unpublished).3 While California federal district courts
have given Mexia mixed treatment, see, e.g., Valencia v.
Volkswagen Grp. of Am. Inc., __ F. Supp. 3d __, No.
15–cv–00887–HSG, 2015 WL 4747533, at *6–7 (N.D. Cal.
Aug. 11, 2015) (discussing cases on both sides and
distinguishing Mexia based on a reading that limits the
holding to cases involving products that were unmerchantable
at the time of purchase); Rossi v. Whirlpool Corp., No.
12–CV–125–JAM–JFM, 2013 WL 1312105, at *5 (E.D. Cal.
Mar. 28, 2013) (rejecting Mexia); Keegan v. Am. Honda
Motor Co., 284 F.R.D. 504, 537 (C.D. Cal. 2012) (following
Mexia), we must adhere to state court decisions—not federal
3
“Even though unpublished California Courts of Appeal decisions have
no precedential value under California law, the Ninth Circuit is ‘not
precluded’ from considering such decisions ‘as a possible reflection of
California law.’” Roberts v. McAfee, Inc., 660 F.3d 1156, 1167 n.6 (9th
Cir. 2011) (quoting Emp’rs Ins. of Wausau v. Granite State Ins. Co.,
330 F.3d 1214, 1220 n.8 (9th Cir. 2003)).
10 DANIEL V. FORD MOTOR CO.
court decisions—as the authoritative interpretation of state
law. W. v. Am. Tel. & Tel. Co., 311 U.S. 223, 237–38 (1940).
Ford argues that Mexia conflicts with the earlier decision
in Atkinson v. Elk Corp. of Texas, 48 Cal. Rptr. 3d 247 (Ct.
App. 2006). But Mexia and Atkinson are not in “plain
conflict.” Cf. Owen ex. rel Owen, 713 F.2d at 1465. In
Atkinson, the pertinent issue was “what is the duration of
implied warranty of merchantability under Magnuson-Moss,”
and the court concluded that § 1791.1 controls. 48 Cal. Rptr.
3d at 257–59. The precise issue of whether § 1791.1
“create[s] a deadline for discovering latent defects,” which
was addressed in Mexia, 95 Cal. Rptr. 3d at 288, was not at
issue in Atkinson. Additionally, the Mexia court relied on
Atkinson approvingly without noting any inconsistency, id. at
295 n.10, and Mexia is consistent with an earlier case, Hicks
v. Kaufman & Broad Home Corp., 107 Cal. Rptr. 2d 761, 768
(Ct. App. 2001) (holding that “proof of breach of warranty
does not require proof the product has malfunctioned but only
that it contains an inherent defect which is substantially
certain to result in malfunction during the useful life of the
product”). Further, the Mexia decision is in line with “the
policy repeatedly expressed by California courts of the need
to construe the Song-Beverly Act so as to implement the
legislative intent to expand consumer protection and
remedies.” Mexia, 95 Cal. Rptr. 3d at 296.
Absent convincing evidence that the California Supreme
Court would decide the issue in Mexia differently, its rule that
§ 1791.1 “does not create a deadline for discovering latent
defects or for giving notice to the seller,” 95 Cal. Rptr. 3d at
288, must be followed. Accordingly, the district court’s order
granting summary judgment as to the Song-Beverly
DANIEL V. FORD MOTOR CO. 11
Consumer Warranty Act claims of Plaintiffs Hauser, Glass,
and Duarte is reversed.4
B. Breach of Express Warranty under the California
Commercial Code
California Commercial Code § 2313 governs express
warranties by the seller. Ford provided Plaintiffs a New
Vehicle Limited Warranty with the purchase of their Focuses.
The express warranty states:
WHAT IS COVERED?
Your NEW VEHICLE LIMITED
WARRANTY gives you specific legal rights.
You may have other rights that vary from
state to state. Under your New Vehicle
Limited Warranty if:
– your Ford vehicle is properly operated and
maintained, and
– was taken to a Ford dealership for a
warranted repair during the warranty period,
then authorized Ford Motor Company dealers
will, without charge, repair, replace, or adjust
all parts on your vehicle that malfunction or
fail during normal use during the applicable
coverage period due to a manufacturing defect
4
The district court denied summary judgment as to Plaintiff Daniel’s
Song-Beverly Consumer Warranty Act claim.
12 DANIEL V. FORD MOTOR CO.
in factory-supplied materials or factory
workmanship.
This warranty does not mean that each Ford
vehicle is defect free. Defects may be
unintentionally introduced into vehicles
during the design and manufacturing
processes and such defects could result in the
need for repairs. For this reason, Ford
provides the New Vehicle Limited Warranty
in order to remedy any such defects that result
in vehicle part malfunction or failure during
the warranty period.
Ford relies on the first paragraph to argue that the warranty
only guarantees against manufacturing defects. Plaintiffs rely
on the second paragraph to argue that the defects that are
guaranteed against include design defects.
“In relation to express warranties, the rules for
interpreting them do not differ from those applied to other
contracts.” Miller v. Germain Seed & Plant Co., 222 P. 817,
829 (Cal. 1924) (Seawell, J., dissenting) (internal quotation
marks omitted). Where a contract provision is “clear and
unambiguous,” it is “not subject to questions of construction
or interpretation.” Neal v. State Farm Ins. Cos., 10 Cal. Rptr.
781, 783 (Ct. App. 1961) (internal quotation marks omitted).
“A . . . provision is ambiguous when it is capable of two or
more constructions, both of which are reasonable.”
Producers Dairy Delivery Co. v. Sentry Ins. Co., 718 P.2d
920, 924–25 (Cal. 1986) (quoting Delgado v. Heritage Life
Ins. Co., 203 Cal. Rptr. 672, 677 (Ct. App. 1984)). “The rule
that any ambiguities caused by the draftsman of the contract
must be resolved against that party applies with peculiar force
DANIEL V. FORD MOTOR CO. 13
in the case of the contract of adhesion.” Neal, 10 Cal. Rptr.
at 784 (internal citations omitted). “Whether language in a
contract is ambiguous is a question of law.” Producers Dairy
Delivery Co., 718 P.2d at 925.
Ford argues that the “materials and workmanship”
language in the first paragraph excludes guarantees against
design defects. See Rice v. Sunbeam Prods., Inc., No. CV
12–7923–CAS–(AJWx), 2013 WL 146270, at *12 (C.D. Cal.
Jan. 27, 2013) (considering the phrase “free from defects in
material and workmanship” in defendant’s warranty); In re
Toyota Motor Corp. Unintended Acceleration Mktg., Sales
Practices, & Prods. Liab. Litig. (Toyota Motor Corp. Litig.),
754 F. Supp. 2d 1145, 1177–78 (C.D. Cal. 2010) (considering
defendant’s warranty language that stated, “This warranty
covers repairs and adjustments needed to correct defects in
material or workmanship of any part supplied by Toyota.”);
Brothers v. Hewlett-Packard Co., No. C-06-02254 RMW,
2007 WL 485979, at *2 (N.D. Cal. Feb. 12, 2007)
(considering language in defendant’s warranty that stated,
“HP warrants that the HP hardware product and all internal
components of the product that you have purchased or leased
from HP are free from defects in materials and workmanship
under normal use during the Limited Warranty Period.”).
However, unlike the warranties in the cases cited by Ford,
Ford’s express warranty is not simply a “materials and
workmanship” warranty, as it references defects that are
introduced during the “design” process. Ford’s express
warranty is ambiguous. The warranty can reasonably be
interpreted to either guarantee against only manufacturing
defects (where the second paragraph is a general explanation
and not a guarantee) or guarantee against both manufacturing
and design defects (where the second paragraph expands the
14 DANIEL V. FORD MOTOR CO.
guarantee to design defects). The ambiguity, which is
without question within a contract of adhesion, must be
resolved against the draftsman, Ford. Neal, 10 Cal. Rptr. at
784. The warranty must be construed to guarantee against
both manufacturing and design defects.
Given the ambiguous terms of Ford’s express warranty,
the district court’s order granting summary judgment as to the
breach of express warranty claims of Plaintiffs Daniel and
Duarte is reversed.5
C. Consumers Legal Remedies Act and Unfair
Competition Law
The Consumers Legal Remedies Act prohibits “unfair
methods of competition and unfair or deceptive acts or
practices undertaken by any person in a transaction intended
to result or which results in the sale or lease of goods or
services.” Cal. Civ. Code § 1770(a). The Act proscribes
“[r]epresenting that goods or services have . . . characteristics
. . . uses, benefits, or quantities which they do not have,” id.
§ 1770(a)(5), and “[r]epresenting that goods or services are of
a particular standard, quality, or grade,” id. § 1770(a)(7). The
Unfair Competition Law proscribes “any unlawful, unfair or
fraudulent business act or practice and unfair, deceptive,
untrue or misleading advertising.” Cal. Bus. & Prof. Code
§ 17200. Fraudulent omissions are actionable under both
consumer statutes. Klein v. Chevron U.S.A., Inc., 137 Cal.
Rptr. 3d 293, 324–26 (Ct. App. 2012).
5
Plaintiff Hauser did not oppose summary judgment on her express
warranty claim, and Plaintiff Glass does not challenge the district court’s
ruling on appeal.
DANIEL V. FORD MOTOR CO. 15
An essential element for a fraudulent omission claim is
actual reliance. Cohen v. DIRECTV, Inc., 101 Cal. Rptr. 3d
37, 47–48 (Ct. App. 2009) (Consumers Legal Remedies Act);
In re Tobacco II Cases (Tobacco II), 207 P.3d 20, 39 (Cal.
2009) (Unfair Competition Law). To prove reliance on an
omission, a plaintiff must show that the defendant’s
nondisclosure was an immediate cause of the plaintiff’s
injury-producing conduct. A plaintiff need not prove that the
omission was the only cause or even the predominant cause,
only that it was a substantial factor in his decision. Tobacco
II, 207 P.3d at 39. A plaintiff may do so by simply proving
“that, had the omitted information been disclosed, one would
have been aware of it and behaved differently.” Mirkin v.
Wasserman, 858 P.2d 568, 574 (Cal. 1993).
That one would have behaved differently can be
presumed, or at least inferred, when the omission is material.
Tobacco II, 207 P.3d at 39. An omission is material if a
reasonable consumer “would attach importance to its
existence or nonexistence in determining his choice of action
in the transaction in question.” Id. (quoting Engalla v.
Permanente Med. Grp., Inc., 938 P.2d 903, 919 (Cal. 1997)).
Alleged defects that create “unreasonable safety risks” are
considered material. See Ehrlich v. BMW of N. Am., LLC,
801 F. Supp. 2d 908, 917–19 (C.D. Cal. 2010) (windshield
with high propensity to crack or chip); Falk v. Gen. Motors
Corp., 496 F. Supp. 2d 1088, 1095–96, 1096 n.* (N.D. Cal.
2007) (defective speedometer); see also Wilson v. Hewlett-
Packard Co., 668 F.3d 1136, 1141–43 (9th Cir. 2012)
(holding in the duty-to-disclose context that an omission must
pose safety concerns to be material). Materiality is judged
from the perspective of a “reasonable consumer,” Ehrlich,
801 F. Supp. 2d at 916, and it is generally a question of fact,
Tobacco II, 207 P.3d at 39.
16 DANIEL V. FORD MOTOR CO.
Here, Plaintiffs have offered sufficient evidence to create
a genuine issue of material fact as to the second sub-element
of reliance—whether they would have behaved differently if
Ford had disclosed the alleged defect. A reasonable fact
finder could infer that a vehicle that experiences premature
and more frequent tire wear would pose an unreasonable
safety risk, such that it can be presumed that the
nondisclosure of the safety risk impacted Plaintiffs’
purchasing decision. Plaintiffs have put forth sufficient
evidence, when viewed in a light most favorable to them, that
the Focus experienced premature and more frequent tire wear,
and that Ford circulated special service messages to its
authorized dealerships informing them that “some 2005–2011
Focus vehicles may exhibit premature front/rear tire wear
and/or a vehicle drift condition when driving on wet or snow
packed roads.” Plaintiffs’ experts opined that worn tires can
pose a safety hazard in terms of road and weather conditions
and potential blowouts. Even Ford acknowledges that “it can
be dangerous to let the tires on any vehicle become
excessively worn before replacing them.” Brief for Appellee
at 25. Ford’s evidence that routine monitoring of the tires
would have prevented safety problems and that excessive tire
wear is not uniquely attributable to the Focus does not
conclusively rebut the presumption of reliance. See Engalla,
938 P.2d at 919.
Whether Plaintiffs have created a genuine issue of
material fact as to the first sub-element—that they would
have been aware of a disclosure by Ford—is a closer
question, but we ultimately conclude that they did. There are,
of course, various ways in which a plaintiff can demonstrate
that she would have been aware of a defect, had disclosure
been made. Here, Plaintiffs chose to do so by showing that
they would have been aware of the defect had Ford disclosed
DANIEL V. FORD MOTOR CO. 17
it to its dealerships. Ford presented evidence that
conclusively establishes that Plaintiffs did not view any
advertising materials produced by Ford prior to purchase.6
But Plaintiffs presented evidence that they interacted with and
received information from sales representatives at authorized
Ford dealerships prior to purchasing their Focuses. This is
sufficient to sustain a factual finding that Plaintiffs would
have been aware of the disclosure if it had been made through
Ford’s authorized dealerships. Mirkin, 858 P.2d at 575.
Ford argues that Plaintiffs need to show more than that it
was hypothetically possible for Ford to disseminate
information through its dealerships. Ford suggests that
Plaintiffs should be required to show that the dealerships
were contractually obligated to pass on disclosures to
consumers or that dealerships would voluntarily do so.
Plaintiffs do not have such evidence. However, Plaintiffs do
have evidence that Ford communicates indirectly through its
authorized dealerships. Plaintiffs received information about
the “characteristics,” “benefits,” and “quality,” Cal. Civ.
Code § 1770(a)(5), (7), of the Ford Focus from Ford’s
dealerships, which is also where they could obtain certain
brochures and booklets about Ford’s vehicles. Under the
terms of Ford’s express warranty, Plaintiffs needed to return
6
It would have been unlikely for Plaintiffs to review warranty,
maintenance, and owner’s booklets that came with the new vehicles prior
to purchase. Consequently, those materials cannot be considered in
determining whether Plaintiffs would have been aware of a disclosure. Cf.
Moore v. Apple, Inc., 73 F. Supp. 3d 1191, 1200–01 (N.D. Cal. 2014)
(concluding reliance cannot be based on representations or omissions that
took place after sale occurred); In re Sony Gaming Networks & Customer
Data Sec. Breach Litig., 903 F. Supp. 2d 942, 969–70 (S.D. Cal. 2012)
(concluding it was impossible to establish reliance on information in
Terms of Service received after purchase).
18 DANIEL V. FORD MOTOR CO.
to Ford dealerships to perform warranty repairs. And it is
through its dealership network that Ford circulated its special
service messages and technical service bulletins when issues
arose with the Focus. Based on this evidence, a reasonable
fact finder could conclude that Ford knew that its consumers
depended at least in part on its authorized dealerships for
information about its vehicles and that Ford’s authorized
dealerships would have disclosed the alleged rear suspension
defect to consumers if Ford had required it. Since Plaintiffs
have sufficient evidence to establish a plausible method of
disclosure and to establish that they would have been aware
of information disclosed using that method, there is a genuine
issue of material fact as to whether they in fact relied on
Ford’s omissions in purchasing the Focus.
Because Plaintiffs have raised a genuine issue of fact as
to reliance, the district court’s order granting summary
judgment on their Consumers Legal Remedies Act and Unfair
Competition Law claims is reversed.
D. Additional Issues Raised by Ford
Because the district court did not address duty to disclose,
actual damages, statutorily-required notice, statute of
limitations, equitable restitution, and sufficiency of the
evidence of tire wear, we decline to do so on appeal.
Peterson v. Boeing Co., 715 F.3d 276, 283 (9th Cir. 2013)
(declining to reach the “alternate, fact-intensive bases for
affirming” when not first addressed by the district court).
E. Magnuson-Moss Warranty Act
Claims under the Magnuson-Moss Warranty Act “stand
or fall with . . . express and implied warranty claims under
DANIEL V. FORD MOTOR CO. 19
state law.” Clemens v. DaimlerChrysler Corp., 534 F.3d
1017, 1022 (9th Cir. 2008). Because we reverse on Plaintiffs’
implied and express warranty claims, the district court order
granting summary judgment as to the Magnuson-Moss
Warranty Act claims is also reversed.
III. Conclusion
We reverse the district court’s summary judgment order
and remand for further proceedings consistent with this
opinion. In light of our reversal, we also instruct the district
court to reconsider its denial of Plaintiffs’ motion for class
certification.
REVERSED and REMANDED with instruction.