Opinion
Case No.: 2:18-ml-02814-AB-PVC 2:18-cv-02594-AB-FFM 2:18-cv-01750-AB-FFM 2:18- cv-07789-AB-FFM
08-30-2023
IN RE FORD MOTOR CO. DPS6 POWERSHIFT TRANSMISSION PRODUCTS LIABILITY LITIGATION Curtis T. Joe v. Ford Motor Company et al. Charles Martin et al. v. Ford Motor Company et al. Mendieta et al. v. Ford Motor Company et al.
Proceedings: [In Chambers] ORDER GRANTING IN PART AND DENYING IN PART FORD'S MOTIONS FOR SUMMARY JUDGMENT ANDRÉ BIROTTE JR., United States District Judge
Before the Court are Defendant Ford Motor Company's ("Ford") Motions for Summary Judgment ("Motions," Dkt. Nos. 1466, 1467, 1468) in the three above-referenced cases. In all cases, Plaintiffs filed oppositions, and Ford filed replies. As to the Joe case, the Court issued a notice pursuant to Fed. R. Civ. P. 56(f)(3), to which the parties responded with Supplemental Briefs. The Motions are GRANT ED in part and DENIED in part, as follows.
I. BACKGROUND
The three cases herein are among the more than 1,000 member cases of the multidistrict litigation ("MDL") In re Ford Motor Co. DPS6 Powershift Transmission Prods. Liability Litig., Case No. 18-ML-02814, concerning allegedly defective DPS6 dual-clutch powershift transmissions installed in certain Ford vehicles. Like most of the plaintiffs in the MDL, Plaintiffs herein assert claims for breach of express and implied warranties under the Song-Beverly Consumer Warranty Act, Cal. Civ. Code §§ 1790-1795.5 ("Song-Beverly" or "Act") (Counts 1 and 2), along with a request for a civil penalty under the Act, and three claims for fraudulent inducement by concealment (Count 3), by intentional misrepresentation (Count 4), and by negligent misrepresentation (Count 5), along with a request for punitive damages, all arising out of an allegedly defective DPS6 transmission with which their vehicles were equipped. The Martin Plaintiffs also allege a claim under the Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq.
Ford now moves for summary judgment on all claims. The Court has previously addressed some, but not all, of the issues raised in the Motions. For efficiency, the Court will refer to relevant prior Orders as appropriate.
II. LEGAL STANDARD
A motion for summary judgment must be granted when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of fact is "genuine" only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party. Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505. A fact is "material" if it may affect the outcome of the case. Id. at 248, 106 S.Ct. 2505. The moving party bears the initial burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the nonmoving party will have the burden of proof at trial, the movant can prevail merely by pointing out that there is an absence of evidence to support the non-moving party's case. Id. The nonmoving party then "must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
"Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.' " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court must draw all reasonable inferences in the nonmoving party's favor. In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Anderson, 477 U.S. at 255, 106 S.Ct. 2505). Nevertheless, inferences are not drawn out of thin air, and it is the nonmoving party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898 (9th Cir. 1987). "[M]ere disagreement or the bald assertion that a genuine issue of material fact exists" does not preclude summary judgment. Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir. 1989).
III. DISCUSSION
The Court will state the relevant disputed and undisputed facts as it discusses each claim. The Court refers to Ford's Statement of Undisputed Facts in each case as "SUF," to any Plaintiff's response thereto as "P. Resp. SUF," and to any Plaintiff's additional facts as "Add'l Fact."
A. The Motions are GRANTED in Part and DENIED in Part as to the Express Warranty Claims
Ford moves for judgment on the express warranty claims on the ground that none of the Plaintiffs provided Ford a reasonable number of repair opportunities. Ford also moves for summary adjudication of the claims for civil penalties, arguing that none of the Plaintiffs raise a triable issue as to willfulness.
1. Whether Plaintiffs Provided a Reasonable Number of Repair Opportunities
The Song-Beverly Act requires a plaintiff to prove that "(1) the vehicle had a nonconformity covered by the express warranty that substantially impaired the use, value or safety of the vehicle (the nonconformity element); (2) the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair (the presentation element); and (3) the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts (the failure to repair element)." Oregel v. American Isuzu Motors, Inc., 90 Cal. App. 4th 1094, 1101, 109 Cal.Rptr.2d 583 (2001) (citing Cal. Civ. Code § 1793.2 and Ibrahim v. Ford Motor Co., 214 Cal. App. 3d 878, 886-87, 263 Cal.Rptr. 64 (2001)). The phrase "reasonable number of repair attempts" is plural, so the consumer must give the manufacturer more than one opportunity to repair the vehicle to bring it into conformity. See e.g., Silvio v. Ford Motor Co., 109 Cal. App. 4th 1205, 1208-09, 135 Cal.Rptr.2d 846 (2003) ("the statute does not require a manufacturer to make restitution or replace a motor vehicle if it has had only one opportunity to repair the vehicle").
Ford argues that none of the Plaintiffs gave Ford more than one repair opportunity for the same nonconformity. See Brownfield v. Jaguar Land Rover N. Am., LLC, 584 F. App'x 874 (9th Cir. 2014) (approving jury instruction that under Song-Beverly Act a plaintiff "must show that [he] brought the car in to [Defendant] for the repair of [a] particular problem on more than one occasion"). a. The Joe and Martin Plaintiffs Raise a Triable Issue as to Whether they Provided a Reasonable Number of Repair Opportunities
In Joe and Martin, the Plaintiffs brought their vehicles for transmission-related repairs at least twice.
In Joe, Mr. Joe took the vehicle for transmission-related repairs three times: on December 4, 2012, for a complaint that the transmission was slipping; on August 2015 for shudder; and in September 2015 because the transmission malfunction service light came on. See SUF 1, 23-26, 28, 31; Add'l Fact 2. During the December 2012 visit, technicians were unable to verify any of the complaints but did perform routine maintenance on the Focus. At the August 2015 visit, technicians reprogrammed the PCM/TCM, replaced the clutch assembly, and installed updated input shaft seals. Add'l Fact 5. At the September 2015 visit, the technicians found diagnostic trouble codes and replaced the TCM. SUF 31. Mr. Joe testified that the vehicle continued to shudder after the last repair, albeit not badly and he assumed the vehicle was operating correctly. See SUF 36, P. Resp. SUF 32; Add'l Fact 11. On April 18, 2017, Mr. Joe called Ford to request a repurchase because he believed his vehicle had a lemon transmission, and one month later Ford denied the request, stating the vehicle did not meet the requirements of the Lemon Law. Add'l Facts 16, 19. Given his three visits, Mr. Joe raises a triable issue as to whether he gave Ford a reasonable number of repair opportunities.
At his deposition, Mr. Joe testified to the effect that he had only two transmission repair visits—the August and September 2015 visits. In his declaration, Mr. Joe attested to a third repair visit—the December 2012 visit. For the reasons stated in Joe's Supplemental Brief (Dkt. No. 1505) and based on Mr. Joe's explanation in his Declaration (Dkt. No. 1480), the Court overrules Ford's objection that Mr. Joe's declaration testimony about the December 2012 visit should be excluded based on the sham affidavit rule. Still, the Court must observe that Mr. Joe's counsel could and should have avoided this issue. Although Mr. Joe's counsel insinuates that Ford's counsel's deposition questions were misleading and confusing, causing Mr. Joe to testify as to only 2 visits, it was Mr. Joe's counsel who should have ensured that their own client's testimony was complete on this point. Counsel's failure left their client vulnerable to Ford's objection.
In Martin, Mr. Day took the vehicle for repairs on March 23, 2015 because it shuddered at low speeds (SUF 21), and on March 7, 2017 because the transmission would get stuck, have a delayed shift, and shuddered when shifting (SUF 23). Day testified that he continued to experience the transmission sticking and the vehicle shuddering after the second visit. In light of these 2 visits, the Martin plaintiffs raise a triable issue as to whether they gave Ford a reasonable number of repair opportunities.
Insofar as Ford argues that the repair opportunities in each case were not for the same alleged non-conformity, all of the above complaints are about non-conformities and they all relate to the transmission. Accordingly, the Joe and Martin express warranty claims overcome this argument. b. Ford is Entitled to Judgment on the Mendieta Express Warranty Claim
In Mendieta, the Plaintiffs brought their vehicle for three transmission-related concerns: on June 5, 2015, for transmission-operation concerns; on September 26, 2015 for TCM reprogramming pursuant to a recall; and on November 9, 2015, because the vehicle lost power and shut down on the highway, which Plaintiffs attributed to transmission issues.
Ford argues that the first and second visits should not count as repair opportunities. Ford argues that the first visit (June 5, 2015) should not count because it was the result of user error—not a non-conformity in the vehicle—that was addressed when the service manager showed Mr. Pardo how to operate the "fake option" (Pardo Depo. 70:17-22) to shift the transmission. The Court has reviewed the salient parts of Mr. Pardo's deposition: he testified that he brought the vehicle in the first time because it made "a little noise" when he would "switch" it from automatic to "mechanic" but that otherwise it did not bother him and he could drive the vehicle, he raised the issue because it was a brand new car, and it seems this happened only once. See Pardo Depo. at 67:24-75:1; SUF 11. Mr. Pardo did not seem to remember much else about that visit, but the Repair Order reflects that he drove the vehicle with the service manager who explained how to operate it, and that there were no repairable conditions with the car. See SUF 12. The Plaintiffs do not dispute SUF 12 or its characterization. In total, the available evidence supports Ford's characterization that this was a user-error issue and not a non-conformity, and Plaintiffs have not pointed to evidence that could raise a triable issue on this point. The Court therefore concludes that the first visit pertained to a user-error issue and not to a non-conformity. As for the second visit (September 26, 2015), Ford argues that it should not count as a repair opportunity because Plaintiffs brought the vehicle for service in response to a warranty service campaign for TCM reprogramming, and not for any problems Plaintiffs experienced. Indeed, Plaintiffs admitted that they don't remember why they sought this service. See SUF 14. Furthermore, and relatedly, other than calling for a TCM reprogram, there is no evidence about what problem the recall campaign was intended to correct, so there is no basis to conclude that this was for a non-conformity within the meaning of Song-Beverly, or that the repair failed. For these reasons, neither the first nor the second repair visits count towards the "reasonable" number of failed opportunities to repair a nonconformity, as necessary to support a Song-Beverly express warranty claim. This leaves only one repair opportunity, on November 9, 2015. As a matter of law, one repair opportunity is insufficient to trigger a manufacturer's obligations to pay restitution or replace the vehicle under Cal. Civ. Code § 1793.2. Ford is therefore entitled to judgment on the Song-Beverly express warranty claim in Mendieta.
2. Whether Plaintiffs Raise a Triable Issue as to Willfulness
Ford also moves for summary judgment as to the civil penalty component of the Song-Beverly express warranty claims, arguing that the Plaintiffs in Martin and Mendieta have not raised a triable issue as to willfulness. In its Motion, Ford did not expressly move for summary adjudication on Joe's claim for civil penalties. The Court issued a notice pursuant to Fed. R. Civ. P. 56(f)(3) inviting supplemental briefing from the parties, and in its supplemental brief, Ford indicated it was in fact seeking judgment on that claim.
The Song-Beverly Act provides that if a manufacturer violates the statute by failing to replace or repurchase a vehicle it cannot repair, the buyer can recover up to twice the amount of actual damages as a penalty "[i]f the buyer establishes that the failure to comply was willful." Cal. Civ. Code § 1794(c). A manufacturer's noncompliance is "willful" when it knows " 'of its obligations but intentionally decline[s] to fulfill them.' " Schreidel v. American Honda Motor Co., 34 Cal. App. 4th 1242, 1249-1250, 40 Cal.Rptr.2d 576 (1995) (citations omitted). "There is no requirement of blame, malice, or moral delinquency. However, 'a violation is not willful if the manufacturer's failure to replace or refund was the result of a good faith and reasonable belief that the facts imposing the statutory obligation were not present.' " Id. (citation omitted).
a. Ford is Entitled to Judgment as to Willfulness in Martin and Mendieta , but not in Joe.
Regarding the Martin vehicle, Ford argues that the Plaintiffs cannot show willfulness because Ford made a prompt offer to repurchase their vehicle. Viewing the entire record, the Court finds that Plaintiffs have not raised a triable issue as to willfulness. Mr. Day brought the vehicle in for transmission-related repairs on March 23, 2015 and March 7, 2017—that is, two visits almost exactly 2 years apart. SUF 19. Plaintiffs argue that Ford's failure to offer a repurchase at two different times shows willfulness. Plaintiffs argue that the first time Ford should have "affirmatively offer[ed] a repurchase or replacement" was after the second repair attempt. Opp'n 5:6-9. But the earliest that Ford's obligation to replace or repurchase could have been triggered was Mr. Day's call in May 2017, 2 months after the second repair attempt. Before then, Mr. Day had brought the vehicle for transmission repairs only twice, and until the phone call, Ford did not know that the second repair attempt allegedly failed. Thus, that Ford did not affirmatively offer a buyback immediately after the second repair attempt does not establish a violation, let alone willfulness.
The Martin Plaintiffs argue that the second time Ford should have offered a buyback was after Mr. Day's May 2017 call saying that he had multiple transmission issues and requesting a buyback. SUF 29; Add'l Fact 11. Ford responded that the vehicle did not qualify for a buyback, and according to Plaintiff, Ford offered to assist with taking the vehicle in for another repair attempt. Add'l Fact 12. It appears that Mr. Day did not pursue the further repair attempt proposed by Ford. But, requiring another repair attempt after only 2 repairs 2 years apart does not demonstrate that Ford knew of its obligations (that the vehicle was truly non-conforming) and intentionally declined to fulfil them. Indeed, Plaintiffs point to no such evidence. Rather, Ford's conduct offering another repair after just 2 prior repairs 2 years apart is consistent with attempting to determine whether the vehicle was in fact non-conforming. C.f. Gezalyan v. BMW of N. Am., LLC, 2009 WL 10674231, at *2 (C.D. Cal. July 15, 2009) (when there is "a good-faith dispute regarding [the manufacturer's] obligations under the Song-Beverly Act . . . civil penalties are not an appropriate remedy in these circumstances.")
Furthermore, Ford did make a buyback offer shortly after the Martin Plaintiffs next contacted it. On December 13, 2017, about 7 months after Mr. Day's buyback request, Plaintiffs' counsel sent Ford a CLRA notice letter demanding rescission and a refund of all payments, along with other damages. SUF 36. On December 19, 2017—only 6 days after the demand letter—Plaintiffs filed this action. On January 5, 2018—only 23 days after receiving the CLRA notice letter and 11 days after Plaintiffs filed suit—Ford offered to repurchase the vehicle by refunding the full purchase price and incidental and consequential costs pursuant to Song-Beverly and the CLRA, along with attorneys' fees of either $6,500 or an amount sought by noticed motion. SUF 37. This offer was for all amounts that Plaintiffs could have recovered under Song-Beverly (other than a civil penalty), yet Plaintiffs did not accept it. Plaintiffs fall back on criticizing the timing of Ford's offer, saying Ford made it only after Plaintiffs filed suit, so it does not negate willfulness. But Plaintiffs sent their demand letter under the CLRA, and the CRLA requires a consumer to send the manufacturer a demand letter at least 30 days before commencing an action for damages; in turn, the manufacturer must make a correction offer within 30 days of the CLRA notice. Cal. Civ. Code § 1782(a), (b). Here, the Plaintiffs did not give Ford the full 30 days required by the CLRA and instead gave Ford only 6 days. By 23 days after receipt of the demand letter (that is, within the 30 day period set by the CLRA), Ford offered Plaintiffs a full repurchase and all other amounts under Song-Beverly (except a civil penalty). It was Plaintiffs who filed suit prematurely—only 6 days after the demand letter, far sooner than the 30 days the CLRA granted Ford to respond—so the fact that Ford's offer came after Plaintiffs filed suit simply reflects that Plaintiffs sued prematurely, not that Ford's offer was untimely or indicates a "willful" violation. Even if Plaintiffs' demand letter did not entail a 30-day waiting period, and even if Plaintiffs did not file suit prematurely, offering a full Song-Beverly remedy (except a civil penalty) within 23 days of a demand tends to refute willfulness.
Furthermore, even an offer made after a plaintiff files suit can rebut willfulness. In Hatami v. Kia Motors America, Inc., 2009 WL 1396358 (C.D. Cal. 2009), the Court considered facts similar to those here. After the plaintiff made five repair attempts in 20 months (as compared to just 2 attempts in 2 years here), counsel demanded a repurchase. In response, Kia offered to inspect and repair the vehicle. Instead of responding to Kia's offer, the plaintiff filed suit under Song-Beverly. About 2 months later, before discovery commenced, Kia made a buyback offer for $9,886, plus loan payoff and fees, and one month after that, Kia made a Rule 68 offer of $30,500 plus costs and fees. Id. at *1. The Court granted Kia judgment on the civil penalties claim, holding that Kia did not act willfully by requiring a further repair attempt, even after 5 failed attempts in 20 months. Id. at *5. Here, after only 2 repair attempts over 2 years, Ford initially declined the buyback request and instead offered a further repair that Plaintiffs did not pursue. Ford's response does not suggest willfulness, but rather an attempt to ascertain whether the vehicle was nonconforming. Plaintiffs have not presented substantial evidence creating a triable issue. Like the Hatami court, considering Ford's entire course of conduct relative to the Martin Plaintiffs' vehicle, the Court finds "willful conduct absent as Defendant's initial response to Plaintiff's request and subsequent buy back offers do not evidence an intent to avoid fulfilling its duty under the Song-Beverly Act." Hatami, 2009 WL 1396358, at *5.
Notwithstanding the Court's conclusion in favor of Ford on willfulness, the string of cases Ford cites for the proposition that courts have granted "summary judgment on civil penalties [ ] where the manufacturer served offers to compromise several months after plaintiffs filed their respective action," do not all so hold, even according to Ford's own parenthetical descriptions of those cases. See Mot. 7:23-8:11. The Court expects better accuracy.
Regarding the Mendieta case, because the claim for breach of express warranty fails, their claim that such a violation was willful necessarily fails as well.
Regarding the Joe case, triable issues of fact preclude judgment on the willfulness claim. As discussed above, there is evidence that Mr. Joe had three transmission-related repair attempts. Furthermore, unlike in Martin, after Mr. Joe's repair attempts and buyback request, Ford did not offer Mr. Joe a buyback or any other remedy; Ford simply outright denied the buyback request. Ford has not shown that it is entitled to judgment on this claim.
B. Plaintiffs' Claims for Breach of the Implied Warranty
Ford argues that all of the claims for breach of the implied warranty fail because none of the Plaintiffs can prove that any alleged defect existed during the one-year duration of the warranty, and they all lack evidence of implied-warranty damages.
1. Whether the Plaintiffs Raise a Triable Issue as to Whether the Alleged Defect Existed During the 1-Year Implied Warranty
Under the Song-Beverly Act, the implied warranty of merchantability lasts no more than one year after the initial sale. Cal. Civ. Code § 1791.1(c); Atkinson v. Elk Corp. of Texas, 142 Cal. App. 4th 212, 231, 48 Cal.Rptr.3d 247 (2006); CACI 3212. However, the warranty "may be breached by a latent defect undiscoverable at the time of sale." Mexia v. Rinker Boat Co., Inc., 174 Cal. App. 4th 1297, 1304, 95 Cal.Rptr.3d 285 (2009). There must, however, be evidence that the defect actually existed at that time. Id. at 1308, 95 Cal.Rptr.3d 285. a. Joe Has Raised a Triable Issue as to Whether the Alleged Defect Existed During the 1-Year Implied Warranty
In the Joe case, Mr. Joe purchased his vehicle on June 5, 2012 (SUF 1), so the implied warranty expired on June 5, 2013. Mr. Joe complained of his transmission slipping within that period—in December 2012. This raises a triable issue as to whether the transmission defect existed during the 1-year duration of the warranty. b. Martin and Mendieta Have NOT Raised a Triable Issue as to Whether the Alleged Defect Existed During the 1-Year Implied Warranty
In the Martin case, the Plaintiffs bought their vehicle in July 2012 (SUF 1), so the implied warranty expired in July 2013. Plaintiffs first took their vehicle in for a transmission repair on March 23, 2015—about 1 year and 8 months after the warranty expired. Plaintiffs argue that "there is substantial evidence that the transmission defects existed within the Subject Vehicle within the first year, even if they were latent and did not manifest until later-the transmission's problems are the result of manufacturing defects and therefore are inherent in the vehicle from the time of its assembly [Add'l Fact 16] . . . ." Martin Opp'n 6:11-15. The Martin Plaintiffs' additional fact 16 cites as support "Declaration of Thomas J. Lepper, ¶¶ 3-4, 11; Declaration of Anthony Micale, ¶¶ 9-12," who are Plaintiff's experts. But the Court has reviewed these cited portions of the expert declarations, and they include no opinion that the issues were caused by latent defects present from the time of the vehicle's assembly. As the Martin Plaintiffs' purported additional fact is unsupported, they have failed to come forward with evidence sufficient to raise a triable issue of fact as to whether the defect was present during the 1-year period, even if it was discovered only later.
In the Mendieta case, the Plaintiffs purchased their vehicle on October 10, 2014 (SUF 1), so the express warranty expired on October 10, 2015. Plaintiffs did bring their vehicle in twice for transmission-related concerns during that 1-year period, but as discussed above, these repairs do not evidence non-conformities: the evidence shows that the June 5, 2015 visit had to do with a user-error issue, while the September 26, 2015 visit was for TCM reprogramming pursuant to a recall about which Plaintiffs have provided no information. There was a third transmission-related visit, on November 9, 2015, because the vehicle lost power and shut down on the highway, which Plaintiffs attributed to transmission issues. However, Plaintiffs have pointed to no evidence that this was a latent issue that existed during the 1-year period. As in Martin, the Mendieta Plaintiffs state that the transmission's problems were the result of manufacturing defects present at the time of assembly, but the parts of their expert (Lepper and Micale) reports that they cite are the same as those discussed above for the Martin case. As above, these expert reports do not support Plaintiffs' proposition. Accordingly, the Mendieta Plaintiffs have not pointed to evidence that the defect existed during the 1-year duration of the implied warranty.
2. Plaintiffs May Pursue Implied-Warranty Damages of "So Much of the Price as Has Been Paid," But Their Claims for Incidental Damages Fail
Ford also argues that all Plaintiffs lack evidence of implied warranty damages. Because Joe is the only case with a surviving implied warranty claim, the Court will focus its discussion on Joe. The Martin or Mendieta implied warranty claims fail as discussed above, but for completeness, the Court will briefly address Ford's arguments about the Martin and Mendieta claims for implied warranty damages.
A plaintiff bringing a Song-Beverly claim for breach of an implied or express warranty can recover "damages and other legal and equitable relief." Cal. Civ. Code § 1794(a). For a claim for breach of implied warranty of merchantability, upon justifiable revocation of acceptance, the remedies are those set forth in California Uniform Commercial Code ("Cal. UCC") § 2711 (buyer's remedies in general, and security interest in rejected goods), § 2712 ("cover"—buyer's procurement of substitute goods), and § 2713 (buyer's damages for non-delivery or repudiation). Cal. Civ. Code § 1794(b)(1). It appears that Plaintiffs invoke Cal. UCC § 2711, which states that a buyer who rightfully rejects or justifiably revokes acceptance of good can "recover[ ] so much of the price as has been paid . . ." Cal. UCC § 2711(1).
a. Plaintiffs Can Recover As Damages "So Much of the Price as Has Been Paid"
The parties' arguments on implied warranty damages are poorly presented and lack candor and diligence. Ford acknowledges that Mr. Joe "seeks replacement or reimbursement, rescission of the contract, cover damages, and incidental and consequential damages. Compl. ¶¶ 130-33." See Mot. 8:19-21. But Ford argues that Mr. Joe lacks evidence of these damages and suggests that in response to an interrogatory asking him to identify all actual damages he claims in this action, he listed only "vague categories of incidental damages" and, essentially, fair market value damages. See SUF 43-45. In its reply, and citing the same SUF 43-45, Ford reiterates that Joe's interrogatory response did not make clear that he sought a "refund of the purchase price." See Reply 4:20-26. Inexplicably, Plaintiff responded "undisputed" to SUF 43-45, and specified amounts for insurance and registration costs that Mr. Joe did not actually include in the interrogatory response. Plaintiff failed to also point out the key fact that Mr. Joe's interrogatory response also specifically stated that his actual damages include "the amount paid or payable under the sales contract." See Nassihi Decl. Ex. I 19:20. The Court is frankly disappointed in Ford's mischaracterization of Mr. Joe's interrogatory response and in Plaintiff's counsel's failure to refute that characterization by informing the Court what the interrogatory response actually said. The parties left this for the Court to sort out. Ford also argues in its reply that Mr. Joe did not explain how he timely and justifiably revoked acceptance, but that argument is itself untimely as Ford made it for the first time in reply, so the Court rejects it.
The Court concludes that Mr. Joe does in fact have evidence of damages represented by "so much of the price as has been paid."
The same reasoning applies to the Martin and the Mendieta implied warranty claims: had those claims survived the Motion, the parties could have sought damages represented by "so much of the price as has been paid."
b. None of the Plaintiffs Can Recover their Alleged Incidental And Consequential Damages
The parties also disagree about whether the Plaintiffs can recover certain registration, insurance, and maintenance costs as incidental and consequential damages. Ford appears to argue that incidental and consequential damages are available only for claims for breach of the express warranty and not for claims for breach of the implied warranty; Plaintiff argues the opposite. Ford also argues that even if such damages are available, the Plaintiffs cannot show that their claimed incidental damages were caused by Ford's alleged breach; Plaintiffs argue the opposite, and that they "ha[ve] evidence of incidental and consequential damages and has produced these to Defendant. [AMF 14, 20-21]," Joe Opp'n 6:22-24, without actually stating what those damages are in the brief. All parties argue that Kirzhner v. Mercedes-Benz USA, LLC, 9 Cal.5th 966, 266 Cal.Rptr.3d 346, 470 P.3d 56 (2020) supports their position regarding causation—that is, whether a plaintiff can show that the specific incidental and consequential damages he seeks were caused by Ford's breach of the implied warranty.
First, as to whether incidental and consequential damages are available for Song-Beverly claims for breach of the implied warranty, Kirzhner answers that question in the affirmative. As relevant to this question, Kirzhner construes § 1794, which sets forth the Song-Beverly remedies available for breach of the express warranty and for breach of the implied warranty. The Court will not rehash its extensive discussion, but in summary, Kirzhner explains that the same incidental damages that are recoverable under Cal. UCC § 2715 (buyer's incidental and consequential damages) when a buyer has accepted the goods (Cal. Civ. Code § 1794(b)(2)), are also recoverable under Cal. UCC § 2711 (buyer's remedies in general) when a buyer justifiably revokes acceptance (Cal. Civ. Code § 1794(b)(1)), see Kirzhner, 9 Cal.5th at 978-979, including for claims for breach of the implied warranty—the claim Plaintiffs assert here. Thus, Kirzhner recognizes that a plaintiff can pursue incidental and consequential damages for a Song-Beverly implied warranty claim. The Court therefore rejects Ford's argument that incidental damages are available only in connection with a breach of express warranty claim. They are also available for a Song-Beverly claim for breach of the implied warranty.
The Court turns to the second question—causation. Cal. UCC § 2715(1) defines what incidental damages are recoverable, stating, "Incidental damages resulting from the seller's breach include [1] expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, [2] any commercially reasonable charges, expenses or commissions in connection with effecting cover and [3] any other reasonable expense incident to the delay or other breach." Cal. UCC § 2715(1) (emphasis and numbered list added). The Plaintiffs do not identify which of these three categories of incidental damages their costs fall within. However, it appears that, if anything, they would be in the first category—care and custody costs—and this is the category Kirzhner considers in its analysis of registration renewal and nonoperation fees.
As relevant here, Kirzhner states that "because registration renewal fees are a standard cost of owning or leasing any vehicle, defective or not, they will normally not be recoverable as incidental damages resulting from a breach of an express or implied warranty." Kirzhner, 9 Cal.5th at 982-83. But Kirzhner also contemplates that additional costs incurred due to a manufacturer's delay in providing a Song-Beverly remedy could be recoverable because those expenses are in the nature of care and custody expenses that benefit the manufacturer because the manufacturer should have already have taken the vehicle back before those expenses were incurred. Id.
Applying this reasoning to the facts before it, the Kirzhner Court held that "the causal link between Mercedes's alleged breach of implied or express warranties and Kirzhner's payment of registration renewal and nonoperation fees is missing" because Kirzhner "[did] not allege any facts tending to show that he incurred increased or additional registration fees that he would not have otherwise paid absent his vehicle's defects and Mercedes's failure to repair. Simply put, the causal link between Mercedes's alleged breach of implied or express warranties and Kirzhner's payment of registration renewal and nonoperation fees is missing." Id. By contrast, incidental damages registration and nonoperation fees incurred after the manufacturer failed to promptly take back the vehicle "resulted from" the manufacturer's delay and are therefore recoverable as incidental damages. Id.
Applying this reasoning to the Joe case, the costs Mr. Joe seeks—registration, insurance, and maintenance—are standard costs he would have incurred regardless of whether the vehicle conformed with the implied warranty, so they were not caused by Ford's alleged breach and thus are not recoverable as incidental damages. Mr. Joe contends that Ford breached its implied warranty obligation from the start, so all of these costs are recoverable, but this is inconsistent with Kirzhner, because Mr. Joe would have incurred those costs regardless of whether the vehicle complied with the implied warranty, so they were not caused by that alleged breach. Furthermore, Ford's Song-Beverly implied warranty obligation would have been to honor Mr. Joe's April 18, 2017 revocation of acceptance. None of the incidental damages Mr. Joe seeks were incurred after that date, so none of those damages could have "resulted from" by Ford's failure to honor that revocation.
For the foregoing reasons, Mr. Joe cannot recover registration, insurance, and maintenance costs as incidental damages.
The same reasoning applies to the Martin and Mendieta claims for incidental damages. The Martin Plaintiffs state in their opposition that they "have evidence of incidental and consequential damages as shown in the sales contract itself and storage fees," Opp'n 7:16-18, without elaborating. But it stands to reason that charges shown in "the sales contract itself" would have been incurred regardless of whether Ford complied with its Song-Beverly implied warranty obligations, so under Kirzhner, those charges could not have "resulted from" any alleged breach by Ford. As for the "storage fees" that were paid for by counsel, those were all accrued after the vehicle "broke[ ] down in 2020," SUF 34, which was itself more than 2 years after Ford offered to repurchase the vehicle, and over one year after Ford served a Rule 68 offer for the price paid or payable, plus incidental and consequential damages, and a two-times civil penalty. SUF 37-38. The Martin Plaintiffs did not accept either offer. Given that Ford offered a repurchase and a full Song-Beverly recovery to Plaintiffs before any storage fees were incurred, those fees did not, as a matter of law, "result from" Ford's alleged breach of its Song-Beverly implied warranty obligation.
The Mendieta Plaintiffs state in their opposition that they "have evidence of incidental and consequential damages as shown in . . . the sales contract itself, the repair orders, and Plaintiffs' insurance payments [Plaintiffs' Resp. to Ford's UMF 21]," Opp'n 7:27-18:2, without elaborating. But as in Martin, charges shown in "the sales contract itself" would have been incurred regardless of whether Ford complied with its Song-Beverly implied warranty obligations, so those charges could not have "resulted from" any alleged breach by Ford. And as with Mr. Joe, Ford's Song-Beverly implied warranty obligation to the Mendieta Plaintiffs would have been to honor their August 2017 revocation of acceptances, so arguably expenses incurred after that date could be incidental damages. But none of the incidental damages that the Mendieta plaintiffs seek could have been incurred after August 2017, because the vehicle was stolen 18 months prior, in February 2016. SUF 18, Resp. SUF 21. Thus, none of the Mendieta Plaintiffs' claimed incidental damages could have "resulted from" Ford's alleged breach of its Song-Beverly implied warranty obligation.
For the foregoing reasons, the Song-Beverly implied warranty claims for incidental and consequential damages fail in all three cases.
C. Ford is Entitled to Judgment on the Martin CLRA Claim
Only the Martin Plaintiffs assert a claim under the CLRA. Ford argues that it is entitled to judgment on this claim because Plaintiffs are not entitled to any form of relief under the CLRA because Ford's correction offer bars the claim insofar as it seeks damages, and Plaintiffs cannot show entitlement to equitable relief. These arguments are meritorious.
1. The Martin Plaintiffs Cannot Pursue Damages Under the CLRA
First, Plaintiffs are barred from pursuing their CLRA claim for damages. At least thirty days before suing for damages under the CLRA, a consumer must (1) notify the person alleged to have committed the violations, and (2) demand that the person "correct, repair, replace, or otherwise rectify the goods or services" in question. Cal. Civ. Code § 1782(a). A correction offer must be made "within 30 days after receipt" of the plaintiff's CLRA notice. Cal. Civ. Code § 1782(b). No award of damages under the CLRA may be given if the alleged violator "makes an appropriate correction, repair or replacement or other remedy." Cal. Civ. Code § 1784. Correspondingly, a plaintiff who has rejected a timely repurchase offer is not entitled to recover damages under the CLRA. Gonzales v. CarMax Auto Superstores, LLC, 845 F.3d 916, 918 (9th Cir. 2017).
Here, Plaintiffs mailed their CLRA notice letter on December 13, 2017, and 23 days later, Ford offered to repurchase Plaintiffs' vehicle by refunding the full purchase price, along with incidental and consequential costs, and attorneys' fees. SUF 37; see Offer Letter (Nassihi Decl. Ex. J, Dkt. No. 1467-13). This is an appropriate, full correction, and Plaintiffs rejected it. Accordingly, Plaintiffs cannot seek damages under the CLRA. Plaintiffs' sole counterargument is that Ford's offer was not an appropriate correction because it required Plaintiffs to release all claims, including those under Song-Beverly and the common law. Tellingly, Plaintiffs do not quote Ford's offer letter, and upon review, the Court finds no such release language. Plaintiffs' argument that the offer was invalid or inadequate is therefore completely unsupported.
2. The Martin Plaintiffs' Claims for Equitable Relief Under the CLRA Fail
Second, the Martin Plaintiffs seek restitution and injunctive relief, but they are not entitled to such equitable relief. The Ninth Circuit has recently emphasized that, as a matter of federal law, a plaintiff seeking equitable relief must allege and prove that there is no adequate remedy at law. Sonner v. Premier Nutrition Corp., 971 F.3d 834, 843-844 (9th Cir. 2020). Monetary damages are generally an adequate remedy for past harm, especially where the legal and equitable claims asserted are "duplicative." Sonner, 971 F.3d at 844; see Nacarino v. KSF Acquisition Corp., 642 F.Supp.3d 1074, 1082-83 (N.D. Cal. 2022) (dismissing UCL and FAL claims, and CLRA claim for restitution). Thus, Plaintiffs' claims for monetary damages—which are duplicative of their CLRA claim for restitution—are an adequate legal remedy, even though the CLRA claim for damages fails on the merits. Indeed, Plaintiffs do not challenge the adequacy of money damages, or correspondingly argue that restitution is the only adequate remedy. Accordingly, Plaintiffs cannot seek restitution.
Nor can Plaintiffs pursue injunctive relief. To establish Article III standing to obtain an injunction, Plaintiffs must prove that they face a threat of future injury that is "actual and imminent." Summers v. Earth Island Inst., 555 U.S. 488, 493, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009). It is not enough to show injury is possible or even likely; the "threatened injury must be certainly impending." Clapper v. Amnesty Int'l USA, 568 U.S. 398, 409-10, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013). To prove that they face the threat of actual and imminent future injury, plaintiffs must show that they intend or desire to buy the product again. See In re Coca-Cola Products Marketing and Sales Practices Litigation, 2021 WL 3878654, at *2 (9th Cir. 2021) ("Without any stated desire to purchase Coke in the future, [plaintiffs] do not have standing to pursue injunctive relief."). Here, Plaintiffs do not claim that they desire to purchase Ford vehicles with DPS6 transmissions in the future, nor do they point to any evidence of such a desire. Instead, Plaintiffs rely on California state court cases discussing public injunctive relief under the CLRA to argue that no such requirement exists to establish standing. But Plaintiffs cases address standing under California law, and not under Article III of the United States Constitution, and Plaintiffs fail entirely to address the latter question. Plaintiffs also vaguely argue that absent an injunction, they would be unable to rely on any of Ford's labels in the future. See Opp'n (Dkt. No 1483) 18:9-13. But this is insufficient to establish the actual and imminent injury required to satisfy Article III. For these reasons, Plaintiffs cannot pursue injunctive relief.
Because the Martin Plaintiffs cannot secure any remedies under the CLRA—neither damages, nor equitable relief (restitution and/or an injunction)—Ford is entitled to summary judgment on that claim.
D. Ford is Entitled to Judgment on All of Plaintiffs' Fraud Claims
All of the Plaintiffs alleged common law claims for fraud by intentional misrepresentation, fraud by negligent misrepresentation, and fraudulent omission. Ford moved for judgment on all of these claims on various grounds.
None of the Plaintiffs opposed Ford's motion for judgment on their intentional misrepresentation and negligent misrepresentation claims. Furthermore, the Court has reviewed Ford's papers and Ford has shown that the undisputed facts establish that the Plaintiffs lack evidence that Ford misrepresented something to them upon which they justifiably relied. Ford is therefore entitled to judgment on these claims. The motions as to the intentional and negligent misrepresentation claims are therefore granted both as unopposed and on the merits. See Local Rule 7-12.
Plaintiffs did oppose the Motions as to their fraudulent omission claims. The Court addresses these claims next.
1. Plaintiffs Lack Evidence to Prove Damages
Ford argues that none of the Plaintiffs have evidence to support their claims for damages. The Court agrees.
As relevant here, a person "defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction, including . . . (1) Amounts actually and reasonably expended in reliance upon the fraud." Cal. Civ. Code § 3343(a) (emphasis added). The Court will refer to these as "fair market value" damages (also referred to as "out-of-pocket" damages) and "reliance" damages.
Ford has shown that Plaintiffs cannot prove fair market value damages. The Court previously addressed in another MDL case what evidence is necessary to raise a triable issue on fair market value damages: " '[T]he term 'actual value' as used in the statute, [means] market value.' Nece v. Bennett, 212 Cal. App. 2d 494, 497, 28 Cal.Rptr. 117 (1963). Therefore, 'actual value' does not mean Plaintiff's subjective valuation of the vehicle. Accordingly, Plaintiff's proffered testimony that the vehicle had no value to him is not probative of actual value, and therefore cannot be used to calculate his out-of-pocket damages." In re Ford Motor Co. DPS6 Powershift Transmission Prod. Liab. Litig., 2019 WL 7185524, at *7 (C.D. Cal. Oct. 29, 2019) ("Pedante"). Furthermore, the "actual value" is "the market value of the property at the time of the purchase." Nece, 212 Cal. App. 2d at 498, 28 Cal.Rptr. 117. Here, Ford has shown that in response to interrogatories asking Plaintiffs to describe the damages they are seeking, each Plaintiff responded (apparently relative to the fraud claims) "Plaintiff has also sustained damages equal to the difference between the value of the vehicle as accepted and the value the vehicle would have been had it been as warranted." See, e.g., Joe SUF 43, 45. But this is nothing more than a paraphrase of § 3343(a), and Ford points out that Plaintiffs have not actually timely disclosed a damages figure. Citing several unpublished state court cases, Plaintiffs argue in their opposition that their own testimony can establish the value of the vehicle. However, even accepting this arguendo, Plaintiffs do not actually direct the Court to any evidence of what such testimony would be. Plaintiffs point to the declarations of their experts Thomas J. Lepper and Anthony Micale, but, at most, those declarations merely opine that the vehicles' alleged nonconformities affected their use, value, and safety, and do not provide an actual valuation. Furthermore, it does not appear that these experts were retained to provide an opinion on market value—something it is not clear they would be qualified to do.
For the foregoing reasons, none of the Plaintiffs have pointed to evidence of the fair market value of their vehicles at the time they purchased it, so they cannot pursue fair market value damages for their fraud claims.
The parties also argue over whether the Plaintiffs can recover reliance damages, such as taxes, fees, and similar charges incurred at the time of purchase, or subsequent costs like insurance. This issue appears to be more complicated than how the parties' addressed it. Because, as discussed below, the fraud claims fail in any event, the Court declines to reach this additional ground.
2. Plaintiffs' Fraud Claims Are Barred by the Economic Loss Rule
Ford argues that Plaintiffs' fraudulent omission claims are barred by the economic loss rule. "[T]he economic loss rule provides [that] where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only 'economic' losses." See Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (2004) (internal quotation omitted). The rule "bar[s] a plaintiff's tort recovery of economic damages unless such damages are accompanied by some form of physical harm (i.e., personal injury or property damage)." North American Chemical Co. v. Superior Court, 59 Cal.App.4th 764, 777, 69 Cal.Rptr.2d 466 (1997). Ford argues that Plaintiffs' fraud claim—a tort—fails under the economic loss rule because they have alleged only economic losses resulting from their disappointed expectations caused by Ford's alleged failure to satisfy its warranty obligations. Plaintiffs argue that Robinson Helicopter established an exception to the economic loss rule for fraudulent inducement claims such as their claims for fraudulent omission.
In a different case in this MDL, Altamirano-Torres, CV 17-07338, the Court held that the economic loss rule barred a fraudulent omission claim indistinguishable from the claims herein. See In re Ford Motor Co. DPS6 Powershift Transmission Prod. Liab. Litig., 483 F. Supp. 3d 838, 847-850 (C.D. Cal. 2020) ("Altamirano-Torres"); see also In re Ford Motor Co. DPS6 Powershift Transmission Prod. Liab. Litig, 2021 WL 1220948, at *4 (C.D. Cal. Mar. 29, 2021) ("Hobart"), appeal dismissed sub nom. Hobart v. Ford Motor Co., No. 21-55487, 2021 WL 5272231 (9th Cir. Oct. 19, 2021). The Altamirano-Torres Order included an extensive discussion of the Robinson Helicopter exception upon which Plaintiffs rely, and the Court found that Robinson Helicopter excepted only fraudulent misrepresentation claims from the operation of the economic loss rule, and did not except fraudulent omission claims like those pled here. The Court sees no reason to depart from that analysis, and incorporates it herein by reference.
As in Altamirano-Torres, Plaintiffs' fraudulent omission claims are barred by the economic loss rule because those fraud claims overlap entirely with their warranty-based claims for economic loss, they allege no physical injury or damage to any property other than their vehicle, nor have they alleged liability for personal damages independent of their economic loss. Altamirano-Torres, 483 F. Supp. 3d at 849 (economic loss rule barred plaintiff's fraud claim where "the foundation of Plaintiff's Song-Beverly claims is the warranty (contract) that Ford allegedly breached by failing to fix his vehicle or repurchase it, and the nature of Plaintiff's damages are purely economic—he alleges no physical injury or damage to any property (other than the vehicle).") Plaintiffs argue that some cases have come out the other way, finding that fraudulent omission claims are not barred by the economic loss rule. The Court acknowledges that courts diverge on application of the economic loss rule to fraudulent concealment/omission claims, and that the Ninth Circuit recently certified to the California Supreme Court the question of whether, "[u]nder California law, are claims for fraudulent concealment exempted from the economic loss rule." Rattagan v. Uber Technologies, Inc., 19 F.4th 1188, 1193 (9th Cir. 2021) (certifying question). However, any uncertainty arising from this circumstance should be resolved so as to limit rather than expand liability. See Del Webb Communities Inc. v. Partington, 652 F.3d 1145, 1154 (9th Cir. 2011) (a federal court "should hesitate prematurely to extend the law in the absence of an indication from the state courts or the state legislature that such an extension would be desirable") (citation omitted). Accordingly, pending further guidance from either the California Supreme Court or the legislature, or from the Ninth Circuit, the Court will adhere to its resolution of this issue in Altamirano-Torres, which appears to remain the majority view in this district.
Thus, the economic loss rule bars Plaintiffs' claims for fraudulent inducement by omission. Ford is therefore entitled to summary judgment on these claims.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS in part and DENIES in part Ford's Motions for Summary Judgment, as follows:
Ford's Motions as to EXPRESS WARRANTY CLAIMS:
• DENIED as to Joe and Martin
• GRANTED as to Mendieta
Ford's Motions as to WILLFULNESS / CIVIL PENALTIES:
• DENIED as to Joe
• GRANTED as to Martin and Mendieta
Ford's Motions as to BREACH OF IMPLIED WARRANTY CLAIMS:
• DENIED as to Joe
• GRANTED as to Martin and Mendieta
Ford's Motions as to BREACH OF IMPLIED WARRANTY DAMAGES:
• DENIED as to All Plaintiffs Claims for Damages Consisting of "So Much of the Price as Has Been Paid"
• GRANTED as to All Plaintiffs' claims for incidental and consequential damages.
Ford's Motion as to the MARTIN CLRA CLAIM:
• GRANTED
Ford's Motions as to FRAUD CLAIMS:
• GRANTED as to all fraud claims brought by all Plaintiffs
Ford must file a Proposed Judgment for the Mendieta case within 7 days of the issuance of this Order. Thereafter, the Mendieta Plaintiffs will have 5 days to object as to form.
IT IS SO ORDERED.