Opinion
Case No. 2:22-cv-04252-MCS-SK
09-27-2023
IN RE HONDA IDLE STOP LITIG.
Proceedings: (IN CHAMBERS) ORDER RE: DEFENDANT'S MOTION TO DISMISS AND PLAINTIFFS' MOTION TO MODIFY THE CASE SCHEDULE (ECF Nos. 90, 105)
Mark C. Scarsi, United States District Judge
Defendant American Honda Motor Co. moves to dismiss the second consolidated amended complaint ("SCAC") of Plaintiffs Hamid Bolooki, Janice Stewart, Sirous Pourjafar, Gabriel Arambula, Sean Crary, Kevin Bishop, Liz Simpson, Andre Williams, Abby O'Neill, Jeff Kaminski, Antoinette Lanus, Devron Elliott, Octavio Ayala, Brandon Derry, Malik Barrett, Ali Qureshi, Deneen Nock, Drew Taranto, Etinosa O'Basuyi, Daniel Rock, Latasha Ransome, Sharon Marie Johnson, Sadia Durrani, Marilyn Thomas, Melissa Howell, and David Jew. (Notice of Mot., ECF No. 90; Mot., ECF No. 90-1.) Plaintiffs oppose the motion, and Defendant filed a reply. (Opp'n, ECF No. 92; Reply, ECF No. 95.) The Court heard argument on July 17, 2023. (Mins., ECF No. 98.)
In its motion, Defendant fails to certify pursuant to Local Rule 11-6.2 whether its brief satisfies the maximum word count of Local Rule 11-6.1, the latter of which states that "no memorandum of points and authorities[ ] . . . may exceed 7,000 words, including headings, footnotes, and quotations." (See generally Mot; Notice of Mot.) Rather, Defendant only acknowledges that it has adhered to "the 25-page limit for moving papers in the Central District," (Mot. 1 n.3), and, consequently, this Court's initial standing order, (Initial Standing Order § 9(d), ECF No. 13). Defendant's liberal use of footnotes—however helpful those footnotes are for the resolution of this motion—casts doubt on Defendant's compliance with Local Rule 11-6.1. Notwithstanding, the Court declines to issue any sanctions at this time, C.D. Cal. R. 83-7, but reminds the parties of their obligation to keep abreast of all applicable procedural rules. Should any party seek relief from the 25-page, 7,000-word limits, that party must first obtain leave from the Court upon a showing of good cause. (Initial Standing Order § 9(d)); C.D. Cal. R. 11-6.1 (providing the word limit "[e]xcept as otherwise . . . ordered by a judge").
After the hearing, the Court ordered the parties to submit supplemental briefing to consider whether any of Plaintiffs' claims were unripe or moot, and the parties complied. (Order Re: Suppl. Br., ECF No. 99; Def.'s Suppl. Br., ECF No. 100; Pls.' Suppl. Br., ECF No. 101.)
I. BACKGROUND
Plaintiffs bring a putative class action against Defendant, asserting breach of implied warranty, unjust enrichment, fraud, and state consumer protection claims. (SCAC ¶¶ 539-1499, ECF No. 82.) According to the SCAC, class members purchased or leased various Honda and Acura models that included defective idle stop functions. (Id. ¶¶ 1-2.) The failing idle stop function led to the class vehicles unexpectedly stopping and shutting down in busy intersections or on highway ramps, which presented allegedly dangerous driving conditions. (Id. ¶¶ 3-4.) Plaintiffs putatively represent Honda and Acura vehicles owners nationwide and in Alabama, California, Connecticut, Delaware, Florida, Illinois, Indiana, Louisiana, Maryland, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Virginia, and Washington. (Id. ¶ 530.)
As Defendant notes, Plaintiffs also include a putative Missouri class but fail to allege any facts giving rise to claims under Missouri law. (Mot. 8 n.10.) The Court disregards Plaintiffs' purported Missouri class.
II. REQUEST FOR JUDICIAL NOTICE
Defendant filed an unopposed request for judicial notice of several Honda and Acura service bulletins ("TSBs") and manufacturers' warranty booklets, which are specific to the year, make, and model of several of the named plaintiffs' cars. (RJN 2-4, ECF No. 90-3.) Though it frames the request as one for judicial notice, Defendant invokes the distinct incorporation-by-reference doctrine. While a district court considering evidence outside the pleadings must normally convert a Rule 12(b)(6) motion into a Rule 56 motion for summary judgment, it need not do so when it considers documents incorporated by reference into the complaint. United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003). A document "may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." Id. at 908.
Consideration of the TSBs and warranty booklets is appropriate. The SCAC contains several references to Honda's and Acura's express warranties (See, e.g., SCAC ¶¶ 562, 665, 818, 905, 1124, 1224, 1316), and TSBs, (see, e.g., id. ¶ 330, 500), which are integral to supporting several of Plaintiffs' claims. Accordingly, the Court may consider the TSBs and warranty booklets without evaluating the motion under Rule 56.
III. LEGAL STANDARDS
Federal Rule of Civil Procedure 12(b)(1) authorizes a party to seek dismissal of an action for lack of subject-matter jurisdiction. "Because standing and ripeness pertain to federal courts' subject matter jurisdiction, they are properly raised in a Rule 12(b)(1) motion to dismiss." Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). In the context of a 12(b)(1) motion, the plaintiff bears the burden of establishing Article III standing to assert the claims. Id.
Rule 12(b)(1) jurisdictional challenges can be either facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). When a motion to dismiss attacks subject-matter jurisdiction on the face of the complaint, the court assumes the factual allegations in the complaint are true and draws all reasonable inferences in the plaintiff's favor. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir. 2009). Moreover, the standards set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), apply with equal force to Article III standing when it is being challenged on the face of the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012) (applying Iqbal). Thus, in terms of Article III standing, the complaint must allege "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955).
In a factual challenge, the moving party "disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone, 373 F.3d at 1039. "When the defendant raises a factual attack, the plaintiff must support her jurisdictional allegations with competent proof under the same evidentiary standard that governs in the summary judgment context." Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (citation and quotation marks omitted). The court need not accept the allegations in the complaint as true. Safe Air for Everyone, 373 F.3d at 1039. The plaintiff bears the burden of proving subject-matter jurisdiction by a preponderance of the evidence. Leite, 749 F.3d at 1121.
Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for "failure to state a claim upon which relief can be granted." "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
The determination of whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. Generally, a court must accept the factual allegations in the pleadings as true and view them in the light most favorable to the plaintiff. Park v. Thompson, 851 F.3d 910, 918 (9th Cir. 2017); Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). But a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
IV. DISCUSSION
The Court first considers Defendant's jurisdictional challenges before discussing the sufficiency of Plaintiffs' allegations. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ("Customarily, a federal court first resolves doubts about its jurisdiction over the subject matter[.]").
A. Subject-Matter Jurisdiction
Defendant raises three jurisdictional challenges: ripeness, mootness, and standing. (Mot. 8-16; Def.'s Suppl. Br. 1.) As to ripeness, Defendant argues that Plaintiffs' claims are all prudentially and constitutionally unripe because Plaintiffs failed to pursue non-judicial remedies of software updates or presentment for repair under the extended warranties. (Mot. 9-12; Def.'s Suppl. Br. 5-7.) To the extent any of Plaintiffs' claims are ripe, Defendant contends that software updates and extended warranties prudentially moot those ripe claims. (Def.'s Suppl. Br. 8-9.) And as to standing, Defendant argues that no Plaintiff has standing to bring claims related to the Honda Ridgeline because no named plaintiff owned or leased a Ridgeline for any year. (Mot. 13-16.)
1. Ripeness
a. Prudential Ripeness
As to prudential ripeness, the Court agrees with Plaintiffs that the doctrine of prudential ripeness does not apply to private contractual disputes. (Opp'n 3 (citing Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 671 (9th Cir. 2005)). See also Golden v. Cal. Emergency Physicians Med. Grp., 782 F.3d 1083, 1087 (9th Cir. 2015) ("[T]he reasoning articulated in Principal . . . for dispensing with the prudential component of the ripeness inquiry applies with equal, if not greater, force in ordinary disputes about contractual enforcement."). Rather, "the proper test for ripeness in private party contract disputes is the traditional ripeness standard[.]" In re Coleman, 560 F.3d 1000, 1006 (9th Cir. 2009) (internal quotation marks omitted). The Court declines to apply prudential ripeness here, where no "abstract disagreements over administrative policies" are at issue. Principal, 394 F.3d at 670 (internal quotation marks omitted).
b. Constitutional Ripeness
Federal courts are limited to deciding "cases" and "controversies," U.S. Const. art. III, § 2, which require the issues to be ripe for review, Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994). Ripeness is a question of timing. United States v. Streich, 560 F.3d 926, 931 (9th Cir. 2009). "For a suit to be ripe within the meaning of Article III, it must present concrete legal issues, presented in actual cases, not abstractions." Colwell v. Dep't of Health & Human Servs., 558 F.3d 1112, 1123 (9th Cir. 2009) (internal quotation marks omitted). Concepts of standing and ripeness are "closely related." Id. To demonstrate standing, a plaintiff must have suffered a concrete and particularized injury in fact that can be fairly traced to the defendant's action and redressed by a favorable judicial decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "While standing is primarily concerned with who is a proper party to litigate a particular matter, ripeness addresses when that litigation may occur." Lee v. Oregon, 107 F.3d 1382, 1387 (9th Cir. 1997). "[I]n many cases, ripeness coincides squarely with standing's injury in fact prong." Thomas v. Anchorage Equal Rts. Comm'n, 220 F.3d 1134, 1138 (9th Cir. 2000) (en banc). Thus, many courts have described ripeness "as standing on a timeline." Id. "A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all." Texas v. United States, 523 U.S. 296, 300, 118 S.Ct. 1257, 140 L.Ed.2d 406 (1998) (internal quotation marks omitted).
In its supplemental brief, Defendant argues that the claims of "Williams, Barrett, Nock, Stewart, Arambula, Crary, Bishop, Simpson, Kaminski, Elliot, Ayala, Derry, Rock, Johnson, Durrani, Thomas, Howell, and Jew[ ] . . . are unripe because they sued [Defendant] without seeking the remedies available to them pre-suit." (Def.'s Suppl. Br. 5.) According to Defendant, "the software updates and extended warranties available to them pre-suit eliminate the allegedly 'defective' and 'unreliable' operation of the Idle Stop feature," which renders any injury contingent on future failures of the idle stop feature. (Id. at 6-7.) Plaintiffs, on the other hand, maintain that they all suffered past and ongoing injuries for driving defective vehicles for years, which devalued their vehicles at least during the period of use before the purported remedies were offered. (Pls.' Suppl. Br. 3.) Additionally, Plaintiffs' charge Defendant with failing to square contradictory arguments, as Defendant cannot reasonably argue that several of Plaintiffs' claims are time-barred yet maintain that those same claims are unripe. (Id. at 4 (citing Alabama v. United States, 630 F. Supp. 2d 1320, 1327 (S.D. Ala. 2008) ("[A] cause of action does not accrue, so as to trigger the limitations period, until the claim is ripe for judicial resolution.")).)
The Court finds that Plaintiffs have demonstrated constitutional ripeness, as each plaintiff has, "[f]or years, . . . been driving vehicles that have unexpectedly stalled." (Pls.' Suppl. Br. 4.) The defective idle stop feature deprived Plaintiffs the benefit of the bargain from at least the time of claim accrual until remediation. Even if Defendant offered software updates and mechanical repairs to address these issues, Plaintiffs allege sufficient facts to plausibly state a claim that Defendant has been unable to remediate the defect despite purportedly having the ability to do so. (SCAC ¶¶ 30, 61, 71, 81, 139, 159, 168, 178, 189, 209, 239, 271, 302, 313.) Even if Defendant "was unable to replicate the failure" during some of their attempts to repair, (see, e.g., id. ¶¶ 139, 168, 178), the consumer and National Highway Traffic Safety Administration ("NHTSA") complaints render plausible that the various remedies existing at the time of filing would not have resolved the idle stop defect, (id. ¶¶ 331, 349, 377, 439, 468, 492). Further, software updates predating filing do little to remediate the loss of true value of the vehicles at the time of sale or the injuries incurred for driving defective vehicles for several years before the software updates issued in March 2022 or later, particularly where Plaintiffs allege that they would not have bought their Honda or Acura vehicles had they known about the idle stop defect. See In re Chrysler-Dodge-Jeep Ecodiesel Mktg., Sales Practices, & Prods. Liab. Litig., 295 F. Supp. 3d 927, 945 (N.D. Cal. 2018) (collecting cases).
And as to any extension of the express warranties, the Court held in the prior dismissal order that the design defect of the idle stop feature is not covered under their terms. (Order Re: MTD FAC 3-5, ECF No. 65.) If the express warranty offers no legal claim for the defect at issue in this case, such warranty should not diminish Plaintiffs' separate and distinct claims either, even if successful repairs may mitigate damages. (Pls.' Suppl. Br. 1.)
Therefore, the Court rejects Defendant's constitutional ripeness challenge.
2. Mootness
As signaled in the Court's order requiring supplemental briefing, Defendant's constitutional ripeness challenge applies only to those plaintiffs who brought suit despite Defendant offering a software update or warranty extension at or before the time of filing. (Order Re: Suppl. Br. 2 (citing Santillan v. Gonzales, 388 F. Supp. 2d 1065, 1075 (N.D. Cal. 2005) ("Claims do not de-ripen; they become moot.")).) The Court thus ordered the parties to brief whether Defendant's software updates and extended warranties mooted any of Plaintiffs' claims. (Id.) In response, Defendant raised the doctrine of prudential mootness. (Def.'s Suppl. Br. 8-9.)
"The doctrine of prudential mootness permits a court to dismiss an [action] not technically moot if circumstances have changed since the beginning of litigation that forestall any occasion for meaningful relief." Deutsche Bank Nat'l Tr. Co. v. FDIC, 744 F.3d 1124, 1135 (9th Cir. 2014) (internal quotation marks omitted). The Ninth Circuit has "applied prudential mootness only in the bankruptcy context, when there are no assets left to distribute." Maldonado v. Lynch, 786 F.3d 1155, 1161 (9th Cir. 2015). Accordingly, the Court declines to apply prudential mootness to any of Plaintiffs' claims, which raise breach of implied warranty, quasi-contract, fraud, and violations of consumer protection laws.
The Court reserves decision on the constitutional mootness question until the parties are in a better position to demonstrate whether the purported remedies successfully address the idle stop defect. See FEC v. Wis. Right To Life, Inc., 551 U.S. 449, 462, 127 S.Ct. 2652, 168 L.Ed.2d 329 (2007) (defining the "established exception to mootness for disputes capable of repetition, yet evading review").
3. Standing
As both parties recognize, "courts in the Ninth Circuit are split on whether a named plaintiff in a putative class action has standing to assert claims based on products the plaintiff has not purchased." Lozano v. Bowmar Nutrition LLC, No. 2:21-cv-04296-MCS-KS, 2021 WL 4459660, at *3 (C.D. Cal. Aug. 19, 2021) (Scarsi, J.); (Mot. 14 n.13; Opp'n 11 n.19). Before class certification, courts usually apply one of three tests.
The first approach holds that when a plaintiff asserts claims based both on products that she purchased and products that she did not purchase, claims relating to products not purchased must be dismissed for lack of standing. Other courts have adopted a "middle-ground" position, holding that sufficient or substantial similarity between the purchased and non-purchased products satisfies the standing requirement for the non-purchased products. Finally, some courts have concluded that so long as a named plaintiff has individual standing to sue for the products they did purchase, any inquiry into products they did not purchase is best left for the class certification stage.Figy v. Frito-Lay N. Am., Inc., 67 F. Supp. 3d 1075, 1083 (N.D. Cal. 2014) (alterations, internal quotation marks, and citations omitted). Consistent with this Court's ruling in Lozano, the Court applies the middle-ground, "substantial similarity" test to determine whether Plaintiffs have standing to bring claims on behalf of owners of the Honda Ridgeline, model years 2015-23. 2021 WL 4459660, at *3.
The Court finds that Plaintiffs' allegations are sufficient to demonstrate substantial similarity between the Ridgeline and the class vehicles they actually own. To start, the Court understands Defendant's jurisdictional challenge as a facial attack. (Mot. 13, 15 (addressing the sufficiency of Plaintiffs' allegations); Reply 7 (arguing that "Plaintiffs must plead facts").) In the SCAC, Plaintiffs assert that the class vehicles, "2015-2023 model year Honda Pilot, Honda Odyssey, Honda Passport, Honda Ridgeline, Acura TLX, and Acura MDX vehicles" are all equipped with the idle stop feature, which they describe with a degree of detail. (SCAC ¶¶ 2-4.) Plaintiffs' theory of substantial similarity is that Defendant, on two separate occasions, issued a single TSB to address issues related to the idle stop feature in the Passport, Pilot, and Ridgeline vehicles. (Id. ¶ 330.) According to Plaintiffs, because Defendant offered a single remedy in those TSBs, the underlying idle stop feature must be the same. (Opp'n 10-11.) Assuming the pleaded facts as true, Holy See, 557 F. 3d at 1073, it is plausible that the Ridgeline is at least substantially similar to the Passport and Pilot given the identical remedies offered for the failing idle stop feature. At the hearing, Defendant questioned the accuracy of these allegations, arguing that the same idle stop feature may be implemented differently across models. However, the Court is not at liberty to question the truth of nonconclusory factual allegations on a Rule 12(b)(6) motion, Park, 851 F.3d at 918, particularly when Plaintiffs support their theory of substantial similarity with factual support. Therefore, the Court rejects Defendant's standing challenge.
This Order does not prevent Defendant from raising, at a later time, a factual attack on Plaintiffs' standing to bring claims on behalf of Ridgeline owners.
The Court rejects each of Defendant's jurisdictional challenges and addresses the sufficiency of Plaintiffs' allegations.
B. Breach of Implied Warranty
Defendant raises two arguments as to the implied warranty claims raised by Crary, Bishop, Simpson, Lanus, and Ayala. First, Defendant argues that because the express warranty had already lapsed, these plaintiffs' implied warranty claims are untimely. (Mot. 16-17.) Second, Honda argues that Ayala also lacks privity with Honda. (Id. at 17-18.)
1. Durational Limitation
According to Defendant, the implied warranty claims of Crary, Bishop, Simpson, Lanus, and Ayala are all time-barred because they first experienced an idle stop defect outside the limitations of the express warranties. (Mot. 16-17.) Defendant points to the Court's prior order dismissing Lanus's and Qureshi's implied warranty claims, arguing now that a similar result should apply. (Id. at 16.) Plaintiffs, on the other hand, contend that because the Court found the idle stop defect to be one of design rather than manufacturing, the express warranty does not limit any implied warranties owed to Plaintiffs at the time of sale. (Opp'n 13-14 (citing, inter alia, Order Re: MTD FAC 3-5).)
The Court first addresses the prior dismissal order. In the first motion to dismiss, Defendant raised a similar argument against O'Neill's, Lanus's, and Qureshi's implied warranty claims, asserting that the expiration of the express warranty barred their claims. (Prior MTD 17, ECF No. 45-1.) Plaintiffs offered no argument in opposition, whether in the first instance or in the alternative, that the express warranty could not limit their implied warranty claims. (Prior Opp'n 14-15, ECF No. 48 (asserting fraudulent concealment and failure of essential purpose).) But contrary to Defendant's understanding, the Court's dismissal of O'Neill's, Lanus's, Qureshi's claims was grounded in waiver, not substance. (Order Re: MTD FAC 11 (deeming the statute of limitations issue as waived).) The Court made no determination that the express warranty created a time bar on Plaintiffs' implied warranty claims. Rather, it was Plaintiffs' failure to offer a sufficient defense of their implied warranty claims that carried Defendant's argument. In any event, Plaintiffs were free "to amend all dismissed claims except their conceded nationwide Magnuson-Moss claim[,]" (id. at 16), in order to properly raise this argument now.
As discussed in the ripeness analysis, the Court finds that the express warranty does not limit Plaintiffs' implied warranty claims and declines to hold these claims time-barred based on inapplicable express warranties. (Id. at 3-5.). The Court rejects Defendant's challenge to Plaintiffs' implied warranty claims.
2. Privity
To state a claim for breach of implied warranty under Nevada law, the buyer and the seller must be in privity. Long v. Flanigan Warehouse Co., 79 Nev. 241, 246, 382 P.2d 399 (1963) ("Where the parties to . . . suit are not the immediate buyer and seller the weight of authority is that such lack of contractual privity will bar recovery on an implied warranty theory."). There are two species of privity: vertical and horizontal. Claridge v. I-Flow Corp., No. 2:18-cv-01654-GMN-BNW, 2019 WL 4139433, at *3 n.1 (D. Nev. Aug. 30, 2019). Horizontal privity is "[t]he legal relationship between a party and a nonparty who is related to the party (such as a buyer and a member of the buyer's family)." Id. (quoting Black's Law Dictionary 1320 (9th ed. 2009)). Vertical privity is "[t]he legal relationship between parties in a product's chain of distribution (such as a manufacturer and a seller)." Id. (same). A plaintiff bringing an implied warranty claim must demonstrate horizontal privity. See Hiles Co. v. Johnston Pump Co. of Pasadena, Cal., 93 Nev. 73, 79, 560 P.2d 154 (1977) ("[L]ack of privity between the buyer and manufacturer does not [preclude] an action against the manufacturer for the recovery of economic losses caused by breach of warranties"); accord Reed v. Arthrex, Inc., No. 3:17-cv-00337-LRH-WGC, 2017 WL 4560140, at *4 (D. Nev. Oct. 11, 2017).
The parties' interpretations of the privity requirement deviate substantially. To Defendant, because Ayala purchased his used 2016 Acura TLX from unrelated third-party dealer, CarMax, there is no privity between the buyer (Ayala) and the manufacturer (Defendant). (Mot. 17.) Plaintiffs, however, argue that there need not be privity between the manufacturer, only between the buyer and the user. (Opp'n 14.) Essentially, Defendant argues that Ayala must have privity with Defendant, while Plaintiffs argue Ayala must have privity with himself, the buyer and the user of the 2016 Acura TLX.
The Court finds that Ayala can proceed with his implied warranty claim against Defendant. As the Nevada Supreme Court held in Hiles, privity between a buyer and a manufacturer is not required to assert "recovery of economic losses caused by breach of warranties." 93 Nev. at 78, 560 P.2d 154. Rather, the only requirement is horizontal privity, which concerns an injured third party who "is trying to place himself in the position of the buyer and take advantage of warranties made to the buyer[.]" Id. at 78 n.5, 560 P.2d 154. Because Ayala is both the purchaser of the 2016 TLX and the injured party, horizontal privity is not at issue in this case. (SCAC ¶¶ 165-66.) The Court rejects Defendant's privity challenge as to Ayala.
C. Fraud and State Consumer Protection
Defendant challenges the fraud and consumer protection claims raised by Bolooki, Bishop, Simpson, Kaminski, Derry, Nock, Rock, and Jew, arguing that these plaintiffs have failed to plausibly allege Defendant's presale knowledge of the idle stop defect. (Mot. 18-21.) Plaintiffs cite several allegations pointing to knowledge, which need only be pleaded generally. Fed. R. Civ. P. 9(b). According to Plaintiffs, a handful of online consumer complaints and complaints filed with the NHTSA support a reasonable inference of knowledge predating each of these plaintiffs' vehicle purchases. (Opp'n 14-19.)
To plead fraud in defective automobile actions, a plaintiff must plausibly allege that the defendant knew about yet failed to disclose the defect at the time of sale. See, e.g., Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1145 (9th Cir. 2012). "In alleging fraud . . . , a party must state with particularity the circumstances constituting fraud," though "knowledge . . . may be alleged generally." Fed. R. Civ. P. 9(b).
Defendant submits that "[t]his is the law in Florida, Delaware, Indiana, New Hampshire, and Washington also." (Mot. 18 (collecting cases that considered, inter alia, the laws of Delaware, Florida, North Carolina, Indiana, Washington, New Hampshire, and Pennsylvania).) While Defendant does not offer any case interpreting Connecticut law, the applicable jurisdiction for Bishop's claim, (SCAC ¶¶ 741-50), the Court agrees that Bishop must allege an omission of facts known when there was a duty to speak, see Reville v. Reville, 312 Conn. 428, 441, 93 A.3d 1076 (2014) ("Fraud by nondisclosure[ ] . . . involves the failure to make a full and fair disclosure of known facts connected with a matter about which a party has assumed to speak, under circumstances in which there was a duty to speak."), i.e., the time of sale, Egan v. Hudson Nut Products, Inc., 142 Conn. 344, 347-48, 114 A.2d 213 (1955). Plaintiffs do not contest whether presale knowledge is required and instead offer arguments why they have plausibly alleged Defendant's knowledge about the idle stop defect at the time of each plaintiff's purchase. (Opp'n 15-19.)
The Court finds that Plaintiffs have plausibly alleged Defendant's knowledge predating the purchases of Bishop, Simpson, Derry, Nock, Rock, and Jew, the earliest of which occurred in April 2016. (Mot. 20.) In its prior dismissal order, the Court sustained the claims of Plaintiffs who bought their Honda or Acura vehicles with evidence of two or more predating NHTSA complaints. (See Order Re: MTD FAC 12; Prior MTD 20-21.) As Defendant acknowledges, at least two NHTSA complaints predate Bishop's, Simpson's, Derry's, Nock's, Rock's, and Jew's transactions. (Mot. 20.) Contemporaneous online consumer complaints, which Defendant allegedly monitors, (SCAC ¶¶ 490-93), bolster a finding of knowledge at least as early as November 2015, the date of the earliest NHTSA complaint, (id. ¶¶ 344-45). Given the predating NHTSA and consumer complaints and Defendant's May 10, 2018 service bulletin, the Court follows the reasoning of its prior dismissal order to conclude that Plaintiffs have plausibly alleged presale knowledge, (SCAC ¶¶ 344-45; Order Re: MTD FAC 12); see also, e.g., Myers v. BMW of N Am., LLC, No. 16-cv-00412-WHO, 2016 WL 5897740, at *4 (N.D. Cal. Oct. 11, 2016).
It is less clear, however, whether Defendant knew of the idle stop defect in September or October 2015, when Kaminski and Bolooki purchased their vehicles, respectively. (SCAC ¶¶ 15, 135.) None of the NHTSA complaints predated their purchases, but Plaintiffs point to three consumer complaints posted on third-party websites in addition to allegations that Defendant may have discovered these issues during presale testing. (Opp'n 17-18; SCAC ¶¶ 490-91, 494-97.) One consumer complaint was entered in October 2015, and two were entered in November 2015. (SCAC ¶¶ 490-92.) In the prior dismissal order, the Court found that consumer reviews posted on third-party websites bore "far fewer indicia of credibility than NHTSA complaints, the latter of which ultimately led to a preliminary investigation into Defendant's idle stop defect." (Order Re: MTD FAC 12.) Here, only one consumer complaint may have predated Bolooki's purchase. The consumer complaint was posted on October 16, 2015, and Plaintiffs only allege that Bolooki "purchased his Pilot . . . in October 2015." (SCAC ¶¶ 15, 491.) It goes without saying that an October 16, 2015 complaint cannot have predated Kaminski's September 2015 purchase.
In any event, while Plaintiffs have not sufficiently alleged presale knowledge with respect to Kaminski and Bolooki resulting from the filing of NHTSA or online consumer complaints, Plaintiffs allege that Defendant would have conducted thorough testing of each of the class vehicles, "including PPAP, DFMEA, MFMEA, DVP&R, and other tests, particularly the idle stop feature's software and hardware components and the different driving customer conditions they may face." (SCAC ¶ 494.) Specifically, Plaintiffs allege that the two "FMEA tests assess methods or modes by which a particular component or system might fail[,]" and, "[i]f properly performed, . . . would have revealed that the Class Vehicles were susceptible to the Idle Stop Defect." (Id. ¶ 495.) Although "there appears to be a split at the district-court level as to whether allegations of pre-sale testing like those here are sufficient to establish knowledge[,]" Browning v. Am. Honda Motor Co., Inc., No. 20-cv-05417-BLF, 2022 WL 5287775, at *3 (C.D. Cal. Oct. 6, 2022) (collecting cases), Plaintiffs' additional allegations of online consumer complaints trickling in contemporaneously with Bolooki's purchase and just one month after Kaminski's purchase cross the threshold into plausibility, id. (finding allegations of presale testing sufficient when paired with additional allegations supporting knowledge). While the online consumer complaints may not have moved the needle alone, Plaintiffs' specific allegations of presale testing, when assumed as true, are sufficient to demonstrate presale knowledge of the defect for the class vehicles. Fed. R. Civ. P. 9(b).
Plaintiffs do not define any of these acronyms.
In sum, Plaintiffs have adequately alleged Defendant's knowledge at the time Bolooki, Bishop, Simpson, Kaminski, Derry, Nock, Rock, and Jew purchased their vehicles. Accordingly, the Court rejects Defendant's motion to dismiss their fraud and consumer protection claims.
D. Statute of Limitations
Defendant argues that claims by Bolooki, Kaminski, Derry, Nock, and Jew are all barred by the statute of limitations for failing to allege active or fraudulent concealment. (Mot. 21-23.) Plaintiffs defend their claims by arguing that there was nothing indicating that they knew or should have known that they had any legal claims against Honda. (Opp'n 19-20.) Plaintiffs further contend that because Kaminski, Derry, Jew, and Nock all presented their vehicles yet couldn't get the idle stop issue resolved, equitable estoppel should save their claims. (Id. at 20.)
As an initial matter, courts routinely dismiss untimely claims at the pleading stage, see, e.g., (Order Re: MTD FAC 15); Skylane LLC v. QBE Specialty Ins. Co., No. 2:22-cv-06018-MCS-SK, 2022 WL 18228187, at *2-4 (C.D. Cal. Dec. 5, 2022) (Scarsi, J.); Hendricks v. Nationstar Mortg. LLC, No. 14-cv-1445-CAB (JMA), 2014 WL 12461324, at *2 (S.D. Cal. July 16, 2014). Plaintiffs argue, however, that a statute of limitations defense is properly considered only when the complaint offers all facts necessary to pass on the affirmative defense. (Opp'n 19.) To a limited extent, the Court agrees, as courts "can consider an affirmative defense on a motion to dismiss when there is some obvious bar to securing relief on the face of the complaint." CFTC v. Monex Credit Co., 931 F.3d 966, 973 (9th Cir. 2019) (internal quotation marks omitted). Here, there is an obvious bar because Bolooki, Kaminski, Derry, and Nock, all brought claims between four and seven years after first experiencing a defect. (SCAC ¶¶ 17, 137, 176, 206, 310; Mot. 22-23.) As to Jew, however, there are no allegations indicating when he first experienced an idle stop defect. (Id. ¶¶ 307-17, 1458-99.) In any event, each of Bolooki's, Kaminski's, Derry's, and Nock's claims are subject to a statute of limitations period of two to four years. (Mot. 21-23 nn. 19-23); N.H. REV. STAT. ANN. § 358-A:3(IV-a), (-b) (three-year statute of limitations for claims under the New Hampshire Consumer Protection Act); id. § 382-A:2-725(1) (four-year statute of limitations for all breach of contract actions); id. § 508:4(I) (three-year statute of limitations for "all personal actions, except . . . slander or libel"). The Court will consider Defendant's statute of limitations argument and Plaintiffs' arguments in defense of their claims.
Because the face of the complaint presents no "obvious bar" for Jew to secure relief, the Court declines to apply the statute of limitations defense to his claims in the first instance. Monex Credit, 931 F.3d at 973. Indeed, it is uncertain from the pleading whether he first experienced an idle stop defect in 2016 (the year of purchase), 2021 (well within the statute of limitations), or any other specific time.
Upon review of the cited authorities, the Court agrees that Defendant has accurately stated the relevant limitations periods for Florida (Bolooki), and Indiana (Kaminski), North Carolina (Nock).
First, Plaintiffs argue there is no basis in the complaint to establish when they "knew or should have known that they had a legal claim against Honda[.]" (Opp'n 19.) In other words, they invoke the delayed discovery rule, which serves to toll otherwise untimely claims. However, in each of the relevant jurisdictions, it is Plaintiffs' burden to prove that the delayed discovery rule applies. See Eddie v. Bank of Am., N.A., No. 8:17-cv-1534-T-26TBM, 2018 WL 573406, at *3-4 (M.D. Fla. Jan. 26, 2018) (Florida); Elwell v. First Baptist Church of Hammond, Inc., No. 2:16-CV-158, 2016 WL 4920021, at *3 (N.D. Ind. Sept. 15, 2016) (Indiana); Horton v. Carolina Medicorp, Inc., 344 N.C. 133, 136, 472 S.E.2d 778 (1996) (North Carolina); Glines v. Bruk, 140 N.H. 180, 181, 664 A.2d 79 (1995) (New Hampshire). Plaintiffs have failed to carry their burden, and the Court finds that their claims must be dismissed absent an exception.
The Court would arrive at the same conclusion even if any of these jurisdictions consider the pleading standards of statute of limitations as procedural, rather than substantive, rules. See, e.g., Guerin v. N.H. Catholic Charities, Inc., 120 N.H. 501, 504, 418 A.2d 224 (1980). "When a motion to dismiss is based on the running of the statute of limitations, it can be granted only if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled." Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980) (emphasis added). As Plaintiffs note, there are no allegations indicating when Bolooki, Kaminski, Derry, or Nock knew or should have known about a claim against Defendant. (Opp'n 19-20.) In other words, Plaintiffs cannot seek refuge in the delayed discovery rule, arguing that they did not plead the relevant facts, because the burden has already shifted to them. Accordingly, the face of the complaint does establish the untimeliness of their claims under federal pleading standards.
To that end, Plaintiffs ask the Court to apply the doctrine of equitable estoppel to their claims. (Opp'n 20.) Equitable estoppel prevents a defendant from asserting a legal right when the plaintiff reasonably and in good faith relied on the defendant's conduct. See Gore v. Myrtle/Mueller, 362 N.C. 27, 33, 653 S.E.2d 400 (2007) (North Carolina); MLB v. Morsani, 790 So. 2d 1071, 1076-77 (Fla. 2001) (Florida); Farrington v. Allsop, 670 N.E.2d 106, 109-10 (Ind. Ct. App. 1996) (Indiana); Great Lakes Aircraft Co., Inc. v. City of Claremont, 135 N.H. 270, 290, 608 A.2d 840 (1992) (New Hampshire). While the Court agrees that equitable estoppel could, in theory, save Plaintiffs' claims, Plaintiffs' conclusory, bare-bones estoppel allegations are insufficient to avoid application of the statute of limitations, particularly given that these allegations sound in knowing concealment, i.e., fraud, that this Court already dismissed. (Order Re: MTD FAC 14; SCAC ¶¶ 526-27); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003); Fed. R. Civ. P. 9(b). Accordingly, the Court finds that Plaintiffs have not carried their burden of asserting equitable estoppel. Beck v. Beck, 175 N.C. App. 519, 527, 624 S.E.2d 411 (2006); Great Lakes Aircraft, 135 N.H. at 853, 610 A.2d 353; State v. Hadden, 370 So. 2d 849, 852 (Fla. Dist. Ct. App. 1979).
While Plaintiffs omit Bolooki from their equitable estoppel section, the Court understands their argument as including Bolooki because footnote 31 offers caselaw interpreting Florida law, Bolooki's jurisdiction. (Opp'n 20 n.31; SCAC ¶¶ 14-15.)
In sum, the Court finds that Bolooki's, Kaminski's, Derry's, and Nock's, claims are all barred by the statute of limitations. As the SCAC is currently pleaded, neither the delayed discovery rule nor equitable estoppel can save their claims. Thus, the Court will grant Defendant's motion as to these plaintiffs. The Court denies application of the statute of limitations as to Jew's claims.
E. Leave to Amend
As a general rule, leave to amend a dismissed complaint should be freely granted unless it is clear the complaint could not be saved by any amendment. Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). "Courts are not required to grant leave to amend if a complaint lacks merit entirely." Lopez v. Smith, 203 F.3d 1122, 1129 (9th Cir. 2000) (en banc). Given the Ninth Circuit's policy of granting leave to amend "with extreme liberality," Hoang v. Bank of Am., N.A., 910 F.3d 1096, 1102 (9th Cir. 2018) (internal quotation marks omitted), the Court grants Plaintiffs leave to amend their claims found to be barred by the statute of limitations. However, this Order serves as notice that an additional failure to properly allege timely claims may result in the denial of leave to amend. McGlinchy v. Shell Chem. Co., 845 F.2d 802, 809-10 (9th Cir. 1988).
F. Scheduling Order
The Court also considers Plaintiffs' motion to modify the schedule, (Mot. to Modify, ECF No. 105), and takes the hearing set for October 16, 2023 off calendar, Fed. R. Civ. P. 78(b); C.D. Cal. R. 7-15.
The motion is denied as premature. Nearly all of Plaintiffs' claims remain standing as currently pleaded except Bolooki's, Kaminski's, Derry's, and Nock's, who need only allege a narrow set of additional facts to maintain the ability to argue that the delayed discovery rule or equitable estoppel apply to their claims. It is uncertain at this stage whether Defendant will pursue additional challenges to Plaintiffs' forthcoming third consolidated amended complaint or whether Plaintiffs are even entitled to add additional plaintiffs or classes. Should the parties seek relief from the scheduling order, they may do so when the need actually arises.
V. CONCLUSION
The Court grants in part Defendant's motion to dismiss. All claims by Bolooki, Kaminski, Derry, and Nock, are dismissed with leave to amend. Plaintiffs shall file an amended complaint within 14 days of this Order provided any amendment complies with Federal Rule of Civil Procedure 11(b). Plaintiffs shall attach to the amended complaint a "redline" version showing all additions and deletions of material. (Initial Standing Order § 13, ECF No. 13.) Failure to timely file an amended complaint will waive the right to do so. Leave to add new parties or claims must be sought by a separate, properly noticed motion.
Plaintiffs' motion to modify the scheduling order is denied.