Ducati.ms

Case5:10-cv-05246-JF Document37 Filed02/14/11 Page1 of 29 DAVID W. ICHEL (pro hac vice)[email protected] MARY ELIZABETH McGARRY (pro hac vice)[email protected] JOSEPH M. McLAUGHLIN (pro hac vice)[email protected] SIMPSON THACHER & BARTLETT LLP425 Lexington Avenue New York, New York 10017Telephone: (212) 455-2000 SIMONA G. STRAUSS, [email protected] STEPHEN P. BLAKE, [email protected] SIMPSON THACHER & BARTLETT LLP2550 Hanover Street Palo Alto, California 94304Telephone: (650) 251-5000 Attorneys for DefendantDUCATI NORTH AMERICA, INC.
of themselves and all others similarly situated, DEFENDANT DUCATI NORTH
AMERICA, INC.’S NOTICE OF
MOTION AND MOTION TO
DISMISS UNDER RULES 12(b)(6)
AND 9(b) OR, ALTERNATIVELY,
TO STRIKE CLASS ALLEGATIONS
UNDER RULES 12(f) AND
23(d)(1)(D); MEMORANDUM OF
POINTS AND AUTHORITIES IN
SUPPORT THEREOF
[Filed Concurrently With: BlakeDeclaration; Request for Judicial Notice; -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page2 of 29 TABLE OF CONTENTS
PLAINTIFFS’ BURDEN AT THE PLEADING STAGE . 5 PLAINTIFFS’ CLAIMS FOR BREACH OF EXPRESS WARRANTY FAIL . 6 COUNT III SHOULD BE DISMISSED BECAUSE PLAINTIFFS HAVE NOT ALLEGED A VIOLATION OF THE IMPLIED COVENANT OFGOOD FAITH AND FAIR DEALING IN ANY EXPRESS WARRANTY. 11 PLAINTIFFS FAIL TO STATE A CLAIM UNDER THE CLRA AND UCL . 12 Claims That Ducati’s Actions Under Its Repair Or Replace Warranty Were Insufficient Cannot Support A CLRA Or UCL Claim . 15 No Reliance On Any Ducati Representation Or Omission Is Alleged . 18 FLORIDA RESIDENT SUGARMAN’S CLRA AND UCL CLAIMSSHOULD BE DISMISSED . 18 PLAINTIFFS’ PURPORTED CLASS ALLEGATIONS SHOULD BE The Proposed Class Is Not Ascertainable by Reference to ObjectiveCriteria. 20 Plaintiffs’ Putative Class Allegations Raise Predominantly -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page3 of 29 TABLE OF AUTHORITIES
Federal Cases
Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) . 5, 12 Baba v. Hewlett-Packard Co. (“Baba I”),No. 09-5946, 2010 WL 2486353 (N.D. Cal. June 16, 2010) . 13, 15, 18 Baba v. Hewlett-Packard Co. (“Baba II”), No. 09-5946, 2011 WL 317650 (N.D. Cal. Jan. 28, 2011) . 6, 14 Baggett v. Hewlett-Packard Co.,No. 07-0667, 2009 WL 3178066 (C.D. Cal. Sept. 29, 2009).15-16 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) . 5, 15 No. 08-4969, 2010 WL 1460297 (N.D. Cal. Apr. 9, 2010) (Fogel, J.) . 13-14, 14-15, 18 Boland, Inc. v. Rolf C. Hagen (USA) Corp.,685 F. Supp. 2d 1094 (E.D. Cal. 2010) . 18 No. 06-2254, 2007 WL 485979 (N.D. Cal. Feb. 12, 2007) . 8 Daniels-Hall v. National Educ. Ass’n,No. 08-35531, 2010 WL 5141247 (9th Cir. Dec. 20, 2010) . 4, 5 Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147 (1982). 20 Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099 (N.D. Cal. 2007). 15 No. 08-5788, 2009 WL 5069144 (N.D. Cal. Dec. 17, 2009) (Fogel, J.). 6, 20, 21, 22 Ice Cream Distributors of Evansville, LLC v. Dreyer’s Grand Ice Cream, Inc.,No. 09-5815, 2010 WL 3619884 (N.D. Cal. Sept. 10, 2010) . 19, 20 In re Bridgestone/Firestone, Inc., 288 F.3d 1012 (7th Cir. 2002) . 23 In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., 174 F.R.D. 332 (D.N.J. 1997) . 23 In re Hitachi Telev. Optical Block Cases, No. 08-1746, 2011 WL 9403 (S.D. Cal. Jan. 3, 2011). 23 In re HP Inkjet Printer Litig.,No. 05-3580, 2008 WL 2949265 (N.D. Cal. July 25, 2008) (Fogel, J.) (unpublished) . 23, 24 In re Paxil Litig., 212 F.R.D. 539 (C.D. Cal. Jan. 13, 2003) . 21 -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page4 of 29 In re Pharm. Indus. Av’g Wholesale Price Litig., 230 F.R.D. 61 (D. Mass. 2005) . 23 Johnson v. Hewlett-Packard Co.,No. 09-3596, 2010 WL 2680772 (N.D. Cal. July 6, 2010). 20 J. P. Morgan & Co., Inc. v. Superior Court, Kearns v. Ford Motor Co.,567 F.3d 1120 (9th Cir. 2009). 6, 12 658 F. Supp. 2d 1022 (N.D. Cal. 2009) . 16 Kent v. Hewlett-Packard Co.,No. 09-5341, 2010 WL 2681767 (N.D. Cal. July 6, 2010) (Fogel, J.) .7-8, 12, 15, 18 Kowalsky v. Hewlett-Packard Co.,No. 10-2176, 2010 WL 5141869 (N.D. Cal. Dec. 13, 2010) . 8 Long v. Hewlett Packard and Co. (“Long I”), No. 06-2816, 2006 WL 4877691 (N.D. Cal. July 27, 2007). 14 Long v. Hewlett-Packard Co. (“Long II”),No. 06-2816, 2007 WL 2994812 (N.D. Cal. Dec. 21, 2006) . 8 Morgan v. Harmonix Music Sys., Inc., No. 08-5211, 2009 WL 2031765 (N.D. Cal. July 7, 2009). 16, 18, 20 Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008) .12, 13, 14, 16-17 Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985). 23 Sanders v. Apple Inc., 672 F. Supp. 2d 978 (N.D. Cal. 2009) (Fogel, J.) . 6, 9, 20, 21 Schwarzkopf v. Intern. Business Machines, Inc.,No. 08-2715, 2010 WL 1929625, at *9 (N.D. Cal. May 12, 2010) . 23 Stearns v. Select Comfort Retail Corp. (“Stearns I”), No. 08-2746, 2009 WL 1635931 (N.D. Cal. June 5, 2009) (Fogel, J.). 6, 7, 20, 21, 22, 23 Stearns v. Select Comfort Retail Corp. (“Stearns II”),No. 08-2746, 2010 WL 2898284 (N.D. Cal. July 21, 2010) (Fogel, J.) . 6-7, 20-21 Tietsworth v. Sears, Roebuck and Co. (“Tietsworth I”), No. 09-288, 2009 WL 1363548 (N.D. Cal. May 14, 2009) (Fogel, J.). 9 Tietsworth v. Sears, Roebuck and Co. (“Tietsworth II”),No. 09-0288, 2009 WL 3320486 (N.D. Cal. Oct. 13, 2009) (Fogel, J.) .14, 17-18 Tietsworth v. Sears, Roebuck and Co. (“Tietsworth III”), 720 F. Supp. 2d 1123 (N.D. Cal. 2010) (Fogel, J.) .16, 17-18, 20, 21, 22 -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page5 of 29 Tidenberg v. Bidz.com, Inc.,No. 08-5553, 2009 WL 605249 (C.D. Cal. Mar. 4, 2009) . 19 Usher v. Greenpoint Mortg. Funding, Inc., No. 10-0952, 2010 WL 4983468 (E.D. Cal. Dec. 2, 2010) . 11 Util. Consumers’ Action Network v. Powernet Global Comm.,No. 06-1773, 2006 U.S. Dist. LEXIS 78546 (S.D. Cal. Oct. 20, 2006) . 24 Federal Statutes & Regulations
Federal Rules
State Cases
Am. Online, Inc. v. Super. Ct., 90 Cal. App. 4th 1 (2001) . 19 Careau & Co. v. Security Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371 (1990). 11 Carey v. Select Comfort Corp.,No. 27 CV 04-015451, 2006 WL 871619 (Minn. Dist. Ct. Jan. 30, 2006).8-9 Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006) . 13, 18 No. A09-405, 2010 WL 2035617 (Minn. Ct. App. May 25, 2010) . 7 State Statutes
Cal. Bus. & Prof. Code § 17200, et seq . 1 Cal. Civ. Code § 1750, et seq. . 1 -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page6 of 29 NOTICE OF MOTION AND MOTION
PLEASE TAKE NOTICE that on April 22, 2011 at 9:00 a.m., or as soon thereafter as the matter may be heard before the Honorable Jeremy D. Fogel in Courtroom 3, 5th Floor, 280 South 1st Street, San Jose, CA 95113, Defendant Ducati North America, Inc. (“Ducati”) shall and hereby does move, pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b) for an order dismissing with prejudice the First Amended Complaint filed by plaintiffs Jonas Sugarman and Quang Le or, alternatively, for an order striking all purported class allegations from the First Amended Complaint pursuant to Federal Rules of Civil Procedure 12(f) and 23(d)(1)(D). This Motion is based on this Notice of Motion and Motion, the annexed Memorandum of Points and Authorities, the accompanying Declaration of Stephen P. Blake, the accompanying Request for Judicial Notice, any papers filed in reply, the argument of counsel, all the records and files in this action, and such additional matters that the Court may deem proper.
MEMORANDUM OF POINTS AND AUTHORITIES
PRELIMINARY STATEMENT
Plaintiffs Jonas Sugarman and Quang Le, purchasers of two models of Ducati motorcycles, seek to represent a putative nationwide class of every person who during an eight-year period purchased or leased any of Ducati’s 24 different models of motorcycles that were equipped with 16 different types of custom-molded thermoplastic fuel tanks. Plaintiffs allege that Ducati breached its express warranty obligations and the implied covenant of good faith and fair dealing, and violated the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., and Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq., by selling motorcycles equipped with such tanks when it “knew or should have known” and “actively concealed” that the plastic used in the tanks “is incompatible with the motorcycles’ fuel.” Am.
Compl. ¶¶ 2-3, 80. These claims are fatally flawed as a matter of law, and should be dismissed First, plaintiffs’ express warranty claims fail because, according to the Amended Complaint’s allegations, Ducati has complied with its warranty obligations. A repair or replacement, as appropriate in the circumstances presented, is the exclusive remedy provided for -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page7 of 29 any purported defect in material and workmanship occurring during the warranty period. The Amended Complaint acknowledges that when any owner or lessee of a Ducati-warranted motorcycle presents Ducati with a fuel tank experiencing a problem, as a matter of express warranty and good customer service, it is Ducati’s policy to replace the fuel tank or repair the problem at no cost to the customer. Id. ¶¶ 2, 26, 57. Indeed, Ducati promptly replaced the fuel tanks and repaired the motorcycles owned by each of the plaintiffs when they were presented to Ducati dealers, fully honoring its express warranty in each case. Id. ¶¶ 31, 36. Plaintiffs thus received exactly what was warranted. Plaintiffs also nowhere allege, as they must for an express warranty claim, that in purchasing their motorcycles they relied on any specific provision in the Ducati Limited Warranty or Emissions Warranty.
Plaintiffs’ CLRA and UCL claims should be dismissed for several independent reasons.
Contrary to law, plaintiffs allege that Ducati violated the these statutes simply by selling them motorcycles that experienced a fuel tank problem during the warranty period. Plaintiffs’ statutory claims depend on the allegation, stated in entirely conclusory terms, that Ducati failed to disclose a known defect in the fuel tanks on the motorcycles purchased by plaintiffs. But the Amended Complaint lacks any specific facts suggesting that Ducati knew or believed that the tanks were defective at the time of plaintiffs’ purchases, and lacks even one alleged representation by Ducati about the tanks. This absence of any allegation of misrepresentation by Ducati falls far short of the heightened pleading requirements applicable to plaintiffs’ CLRA and UCL claims under Fed.
R. Civ. P. 9(b). Moreover, the statutory claims cannot rest on allegations of nondisclosure where no contrary affirmative representation by Ducati has been alleged and plaintiffs have not alleged that they—or even one member of the putative class—have experienced any safety issue relating to their tanks. No accidents or bodily injury claims have ever been reported to Ducati related to a fuel tank by either plaintiffs or any other person, and plaintiffs do not allege otherwise.1 Plaintiff Sugarman’s CLRA and UCL claims should be dismissed with prejudice for theadditional reason that he is a Florida resident, and has not alleged any relevant contact with California, barring assertion of California consumer protection law claims by him.
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page8 of 29 In addition, plaintiffs’ class allegations should be stricken on the pleadings because the proposed class simply cannot be certified. Plaintiffs’ assertion of their claims as a putative nationwide, all-model, eight-year class action multiplies exponentially the inadequacies of the conclusory allegations of the Amended Complaint. The proposed class is hopelessly overbroad, proposing as members every owner or lessee of any model Ducati motorcycle anywhere in the United States (alleged to number “approximately 50,000” (Am. Compl. ¶ 40)), irrespective of the many necessary individual inquiries, including whether such persons experienced any problem with their tanks, ever sought a warranty repair or replacement, or received a fully satisfactory warranty repair or replacement and therefore did not suffer any injury at all. For these reasons, the purported class fails to satisfy the requirement that class membership be objectively ascertainable without individualized inquiry. In addition, no class could be certified because the statutory and common law claims asserted present myriad individualized factual and legal questions that must be litigated and resolved on a customer-by-customer basis under the laws of multiple jurisdictions.
SUMMARY OF ALLEGATIONS
Named Plaintiffs’ Allegations. Ducati is a California corporation with its headquarters in
Cupertino, California. Ducati markets and sells motorcycles, and provides, among other things, “warranty service of Ducati motorcycles sold within the United States.” Am. Compl. ¶ 7.
Plaintiff Sugarman is a Florida resident, and alleges that in April 2009 he purchased a 2009 Ducati 1198S motorcycle from the Ducati Miami dealership in Miami Gardens, Florida. Id. ¶¶ 5, 29. Sugarman makes no specific allegations regarding what, if anything, he reviewed, considered, or relied on when deciding to purchase his motorcycle. He alleges that approximately five months after his purchase, he “noticed that his fuel tank was deforming,” and “[o]ver the next month or two . . . that fuel was leaking from the fuel tank.” Id. ¶ 30. He alleges that he took his motorcycle to the Ducati Miami Dealership, which replaced his tank under the Limited Warranty (defined below) at no cost to him. Id. ¶ 31. Sugarman also alleges that “[w]ithin a few months” the replacement tank “was also deforming” and that he “is concerned that the same problems he has experienced” will recur. Id. ¶ 32. He does not allege that Ducati would not repair any problem, or that his motorcycle has ever experienced any safety issue.
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page9 of 29 Plaintiff Le is a California resident, and alleges that in August 2007 he purchased a 2007 Ducati SportClassic 1000 Special Edition motorcycle from the Southern California Triumph Ducati dealership. Id. ¶¶ 6, 34. Le too makes no specific allegations regarding what, if anything he reviewed, considered, or relied on when deciding to purchase his motorcycle. He alleges that in April or May 2009 he noticed that his fuel tank was “wobbling while he was riding,” saw that the tank was “bulging,” and took the motorcycle to the Southern California Triumph Ducati dealership, “where his fuel tank was replaced under warranty with another fuel tank made of the same plastic material.” Id. ¶¶ 35-36. According to Le, in September 2010—after his motorcycle was outside the two-year warranty period (id. ¶ 34, 54)—he “noticed that the fuel tank was again deforming and coming loose,” and he took the motorcycle back to the dealership, which repaired the issue by “shimm[ing]” the fuel tank, i.e., “by adding washers to the fuel tank mounts.” Id. ¶ 37. Le also does not allege that Ducati would not repair any problem, or that his motorcycle has Ducati’s Limited Warranty. Each Ducati motorcycle comes with a written two-year
Limited Warranty (the “Limited Warranty”).2 Am. Compl. ¶ 54. The Limited Warranty provides: [F]or a period of [two years] from the date of initial retail purchase from anauthorized Ducati motorcycle dealer that each new Ducati motorcycle shall be free, under normal use and maintenance, from any defect in material andworkmanship, subject to [enumerated] conditions, exclusions, obligations and Plaintiffs neither attach the Limited Warranty nor allege all of its relevant terms notwithstanding its importance to their claims and the repeated references to it in theAmended Complaint. However, this Court “may consider evidence on which the ‘complaint “necessarily relies” if: (1) the complaint refers to the document; (2) thedocument is central to the plaintiff’s claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.’” Daniels-Hall v. National Educ. Ass’n, No. 08-35531, 2010 WL 5141247, at *3 (9th Cir. Dec. 20, 2010) (citations omitted). The two written express warranties relied on in the Amended Complaint—the “Limited Warranty”and the “Emissions Warranty”—are attached to the Declaration of Stephen P. Blake (“Blake Decl.”) filed herewith, and Ducati has concurrently filed a request that the Courttake notice of these exhibits.
Ducati’s Limited Warranty was updated in or around 2007. Both plaintiffs should be governed by the updated Limited Warranty contained in Exhibit A to the BlakeDeclaration, as plaintiff Sugarman purchased his motorcycle in 2009 and plaintiff Le purchased his in 2007. However, Exhibit B to the Blake Declaration contains the earlierversion in case any claims are asserted under this prior Limited Warranty. Each version is substantially identical as to all terms relevant to this motion.
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page10 of 29 Blake Decl. Ex. A; see also id. Ex. B. Critically, the Limited Warranty expressly states that the “exclusive” remedies for “[a]ny material or workmanship found to be defective by Ducati” within the warranty term is that such defect shall, as appropriate, “be repaired or replaced without charge for parts and/or labor” at an authorized Ducati dealer. Blake Decl. Ex. A; see also id. Ex. B (“remedied without charge for parts and/or labor”). Ducati’s Limited Warranty thus is a “repair or replace” warranty that does not promise a perfect motorcycle for all time, but rather states that within the warranty period Ducati will, at no cost to the customer, provide any necessary and covered repairs. Indeed, the Limited Warranty disclaims, in all-capital letters, liability “for any other expense, loss or damage.” Blake Decl. Ex. A; see also id. Ex. B. The Limited Warranty also excludes coverage for, inter alia, motorcycles in competitions, misused or altered in a manner not recommended or approved in writing by Ducati, lack of reasonable and proper maintenance, and any inconvenience, loss of use or transport of the motorcycle to the dealer. Blake Decl. Ex.
A.; see also id. Ex. B. It also conspicuously states that any implied warranties are limited to the express terms of the Limited Warranty. Blake Decl. Ex. A; see also id. Ex. B.
ARGUMENT
PLAINTIFFS’ BURDEN AT THE PLEADING STAGE
Dismissal is appropriate under Fed. R. Civ. P. 12(b)(6) if plaintiffs fail to proffer “enough facts to state a claim to relief that is plausible on its face,” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007), or lack a “cognizable legal theory.” Stearns v. Select Comfort Retail Corp.
(“Stearns II”), No. 08-2746, 2010 WL 2898284, at *7 (N.D. Cal. July 21, 2010) (Fogel, J.) (citations omitted). While well-pleaded allegations of material fact are assumed to be true, courts need not accept as true allegations that are conclusory, unwarranted deductions or unreasonable inferences. See Daniels-Hall, 2010 WL 5141247, at *3. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Moreover, the heightened requirements of factual particularity mandated by Fed. R. Civ. P.
9(b) apply to CLRA and UCL claims based on alleged non-disclosure of a known product defect -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page11 of 29 by the defendant. Baba v. Hewlett-Packard Co. (“Baba II”), No. 09-5946, 2011 WL 317650, at *2, *4 (N.D. Cal. Jan. 28, 2011) (Rule 9(b) applies where such claims are premised on allegations “that [company] knew of but concealed the [alleged] defect and made false representations about the [product] and warranty”). To satisfy Rule 9(b), a plaintiff must allege the “who, what, when, where, and how of the misconduct alleged.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009). General pleadings alleging only conclusory allegations of concealment and non- disclosure “do not come close to satisfying the pleading requirements of Rule 9(b).” Stearns v. Select Comfort Retail Corp. (“Stearns I”), No. 08-2746, 2009 WL 1635931, at *9 (N.D. Cal. June Courts will dismiss claims with prejudice in cases alleging product defect where the plaintiffs’ claim is foreclosed as a matter of law. See, e.g., Hovsepian v. Apple, Inc., No. 08-5788, 2009 WL 5069144, at *3, *4 (N.D. Cal. Dec. 17, 2009) (Fogel, J.) (dismissing CLRA and UCL PLAINTIFFS’ CLAIMS FOR BREACH OF EXPRESS WARRANTY FAIL
Counts I and II, for breach of express warranty, should be dismissed for at least three reasons: (a) no breach of warranty is alleged because, according to the Amended Complaint’s allegations, Ducati is, in accordance with the terms of its Limited Warranty, providing the promised repair or replacement remedy to any customer (including the named plaintiffs) whose tank experiences an issue; (b) plaintiffs fail to plead any specific term of the alleged warranty that has been breached; and (c) plaintiffs have not alleged reliance on the Limited Warranty in purchasing their motorcycles. In addition, Count II—predicated on Ducati’s Emissions Warranty—is inapplicable to the claim of defect alleged here.
First, plaintiffs’ express warranty claim must be dismissed because the Amended Complaint’s allegations acknowledge that Ducati is honoring its obligation under its Limited Warranty to provide a “repair or replacement” by repairing or replacing during the warranty period any tank that experiences a problem at no cost to the customer. See Am. Compl. ¶¶ 2, 26, 57. “A claim for breach of express warranty requires an actual breach,” Sanders v. Apple Inc., 672 F.
Supp. 2d 978, 988 (N.D. Cal. 2009) (Fogel, J.) and “is measured by[] the terms of that warranty.” -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page12 of 29 Stearns II, 2010 WL 2898284, at *12. Here, the exclusive remedy for any customer who experiences a defect in material or workmanship during the warranty period is to obtain warranty repairs or replacement from an authorized Ducati dealer. See Blake Decl. Ex. A. An exclusive remedy contained in a warranty, such as a “repair or replace” remedy, will be enforced unless it fails of its essential purpose, which occurs only in the limited circumstance where “enforcement of the limited remedy would essentially leave plaintiff with no remedy at all.” Stearns I, 2009 WL 1635931, at *5 (emphasis in original); see also Polzin v. Chrysler Group LLC, No. A09-405, 2010 WL 2035617, at *2 (Minn. Ct. App. May 25, 2010) (“[I]f a ‘seller repairs the goods each time a defect arises, a repair-and-replacement clause does not fail of its essential purpose.’”) (citations omitted). Here, Ducati’s Limited Warranty is a “repair or replace” warranty that does not promise a perfect bike, but rather a repair or, at Ducati’s discretion, a replacement if necessary to address the manifestation of any defect in materials or workmanship. See, e.g., Blake Decl. Ex. A; see also Kent v. Hewlett-Packard Co., No. 09-5341, 2010 WL 2681767, at *8 (N.D. Cal. July 6, 2010) (Fogel, J.) (seller “did not guarantee that the operation of the [product] would be ‘uninterrupted or error-free.’ Instead, [seller] warranted that it would offer repairs, replacements, or refunds in the event that defects did manifest during the warranty period”).
Plaintiffs have failed to allege that any conduct by Ducati breached any term of the Limited Warranty. According to the Amended Complaint, Ducati replaced the fuel tanks and repaired the motorcycles owned by each of the plaintiffs when they presented them to their Ducati dealers, fully honoring its warranty in each case. Am. Compl. ¶¶ 2, 26, 57. Nor do plaintiffs allege that Ducati refused to repair or replace the tank of any putative class member who may have experienced a covered issue and requested a warranty repair or replacement from a Ducati dealer.
Instead, plaintiffs merely allege—contrary to the plain language of the Limited Warranty and governing law—that a repair or replace warranty entitles them to a different type of fuel tank altogether than Ducati provided. Id. ¶ 4.
A seller of a product “is not liable for breach of express warranty merely because a product manifests recurring failures during (or after) the warranty period. Rather, the question is whether Plaintiffs sought repairs, refunds, or replacements and, if so, whether [seller] responded -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page13 of 29 appropriately under the warranty.” Kent, 2010 WL 2681767, at *6; Long v. Hewlett-Packard Co. (“Long II”), No. 06-2816, 2007 WL 2994812, at *4 (N.D. Cal. Dec. 21, 2006) (“a plaintiff cannot maintain a breach of warranty claim under California law for a product that is repaired within the warranty period and fails again months after the warranty has expired”). Plaintiffs’ allegations track those of the plaintiffs in Long II, who also alleged that the fix provided by seller under a repair or replace warranty for an issue occurring in-warranty “was inadequate because [seller] merely substituted one defective [component] for another.” Long II, 2007 WL 2994812, at *4.
The court determined that under an express warranty promising (as here) that components “will be free from defects in materials and workmanship” for a fixed period, the seller “fulfilled its warranty promises” by providing plaintiff with a product that was “fully operable” during the warranty period. Id. at *5. That is, although a warranted component failed during the warranty period, seller “tendered an adequate repair” as a matter of law because the product “was again fully operable when [seller] returned it to [plaintiff].” Id. “The allegation that the new [replacement part] malfunctioned again several months outside the warranty period is immaterial to [plaintiff’s] breach of express warranty claim.” Id. at *5.
Similarly, in Brothers v. Hewlett-Packard Co., No. 06-2254, 2007 WL 485979, at *4 (N.D.
Cal. Feb. 12, 2007), the court rejected plaintiff’s assertion that an in-warranty repair of the product was “inadequate” because seller allegedly “replac[ed] a defective part with another defective part,” and the same defect reoccurred outside the warranty period. The court dismissed a claim of breach of express warranty to repair or replace during the warranty period where, as here, it was undisputed the allegedly defective component was replaced during the warranty period. Id.
(“replacement or repair of malfunctioning components during the life of the warranty is exactly what the Limited Warranty provides”).3 As detailed above, Ducati did not warrant any particular See also Kowalsky v. Hewlett-Packard Co., No. 10-2176, 2010 WL 5141869, at *13 (N.D.
Cal. Dec. 13, 2010) (“Nor can Plaintiff state a claim under the theory that Defendantbreached its express warranties by continuing to offer replacement [products] that it knew to be defective” where the complaint “does not plausibly allege that [defendant] had priorknowledge of a widespread design defect.”); Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1141 (C.D. Cal. 2005) (dismissing breach of warranty claim where plaintiff allegedan in-warranty repair “simply masked the problem until after the express warranty had allegedly expired” and that the alleged defect was “continuing in nature”); Carey v. SelectComfort Corp., No. 27 CV 04-015451, 2006 WL 871619, at *5 (Minn. Dist. Ct. Jan. 30, -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page14 of 29 design or guarantee that no part on its motorcycles would ever contain a defect; Ducati warranted only that any issues would be remedied during the warranty period. Plaintiffs’ warranty claim is therefore precluded as a matter of law, and should be dismissed with prejudice.
Second, “[t]o plead an action for breach of express warranty under California law, a plaintiff must allege . . . the exact terms of the warranty.” Sanders, 672 F. Supp. 2d at 986–87.
Plaintiffs have alleged only a summary description of the warranty here, that Ducati “extends an express warranty under which ‘it guarantees all its bikes for a period of 24 months from registration, with unlimited mileage.’” Am Compl. ¶ 54. This kind of summary of the warranty does not satisfy the requirement that the exact terms allegedly breached be pleaded. Tietsworth v. Sears, Roebuck and Co. (“Tietsworth I”), No. 09-288, 2009 WL 1363548, at *2 (N.D. Cal. May 14, 2009) (Fogel, J.) (allegation that “parts and workmanship were warranted to be ‘free from defects for’” fixed period “failed to allege the exact terms of the warranty” and therefore failed to Third, plaintiffs nowhere allege—as they must—that in purchasing their motorcycles they reasonably relied on a particular statement in Ducati’s Limited Warranty or even on the existence of a warranty. Id. (dismissing express warranty claim for failure to plead “facts establishing [plaintiff’s] reasonable reliance on the warranty”); Sanders, 672 F. Supp. 2d at 988 (dismissing express warranty claim because plaintiff “fail[ed] to allege reasonable reliance on any specific representations” seller made concerning the product). Plaintiffs strain to approximate reliance by alleging that Ducati’s “2-year standard express warranty is heavily touted by Ducati,” and that plaintiffs generally “were aware of” such warranty, and after the purchase plaintiffs registered their motorcycle with Ducati to take advantage of the warranty. Am. Compl. ¶ 55. Plaintiffs do not even offer this “aware of” allegation as to the Emission Warranty, providing an additional basis for dismissal of Count II. Their vague “aware of” allegation concerning the Limited 2006) (holding that “[a]s long as the seller repairs the goods each time a defect arises, arepair and replacement clause does not fail of its essential purpose” and dismissing purported nationwide class action based on premise that defect would recur becauseplaintiff acknowledged that seller “has offered to send out replacement pieces” and there were no allegations “that the express warranty will not be honored”).
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page15 of 29 Warranty does not meet the applicable pleading standard, because neither plaintiff alleges that he actually read the warranty (or received any pre-purchase representation from Ducati), much less that he was aware of any specific representation during the Limited Warranty period.
Nor do the allegations of the Amended Complaint remotely support plaintiffs’ attempt to allege a breach of Ducati’s Emission Warranty (Count II) contained in the Owner’s Manual for their motorcycles. The Emission Warranty provides, in pertinent part, that each Ducati A) is designed, built and equipped so as to conform at the time of initial retailpurchase with all applicable regulations of the United States Environmental Protection Agency and California Air Resources Board; and B) is free from defects in material and workmanship which cause such motorcycleto fail to conform with applicable regulations of the United States Environmental Protection Agency or the California Air Resources Board for a period of use of30,000 kilometers (18,641 miles), or 5 (five) years from the date of initial retail Blake Decl. Exs. C & D (emphasis added). Like the Limited Warranty, the remedies under the Emissions Warranty are also limited to repair and replacement: The liability of Ducati under this Emission Control Systems Warranty is limited solely to the remedying of defects in material or workmanship by an authorizedDucati motorcycle dealer at its place of business during customary business hours.
This warranty does not cover inconvenience or loss of use . . . . Ducati shall notbe liable for any other expenses, loss or damage, whether direct, incidental, consequential or exemplary arising in connection with the sale or use of orinability to use the Ducati motorcycle for any purpose . . . .
But the Amended Complaint nowhere alleges any emissions problems on the plaintiffs’ motorcycles. Plaintiffs attempt to recast their fuel tank defect allegations as a breach of the Emission Warranty by asserting, in wholly conclusory terms, that the alleged “incompatibility” of the fuel tanks with the fuel utilized causes the entire “fuel system” on every Ducati motorcycle to violate “EPA regulations by resulting in an unsafe condition . . . .” Am. Compl. ¶ 65. But the sole EPA regulation they cite (id. ¶ 64) does not support plaintiffs’ construct. It states that “[a]ny system installed on or incorporated in a new motorcycle to enable such vehicle to conform to standards imposed by this subpart . . . [s]hall not in its operation, function, or malfunction result in-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page16 of 29 any unsafe condition . . . .” 40 C.F.R. § 86.408-78, subpart E (emphasis added). The “standards imposed by this subpart” are emissions standards. Id. The governing statute provides that “[t]he cost of any part, device or component . . . that is designed for emission control . . . the failure of which shall not interfere with the normal performance of the vehicle . . . shall be borne or reimbursed at the time of replacement by the vehicle manufacturer.” 42 U.S.C. § 7541(a)(3) (emphasis added). A part that is “designed for emission control” is defined precisely as “a catalytic converter, thermal reactor, or other component installed on or in a vehicle for the sole or primary purpose of reducing vehicle emissions (not including those vehicle components that were in general use prior to model year 1968 and the primary function of which is not related to emission control).” Id. (emphasis added). Plaintiffs do not allege (nor could they) that a fuel tank—the primary purpose of which is to hold fuel and which was in general use prior to 1968—is a part installed “for the sole or primary purpose of reducing vehicle emissions.” Moreover, the Amended Complaint does not allege that Ducati has failed to repair or replace any fuel tank with a problem brought into a Ducati dealer. To the contrary, Plaintiffs allege that Ducati has replaced or repaired any tanks presenting a problem, thus fully honoring any warranty claim even assuming arguendo that the Emissions Warranty applies. See Am. Compl. ¶¶ COUNT III SHOULD BE DISMISSED BECAUSE PLAINTIFFS HAVE NOT
ALLEGED A VIOLATION OF THE IMPLIED COVENANT OF GOOD FAITH
AND FAIR DEALING IN ANY EXPRESS WARRANTY
The implied covenant of good faith and fair dealing “is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.’” Usher v. Greenpoint Mortg. Funding, Inc., No. 10-0952, 2010 WL 4983468, at *9 (E.D. Cal. Dec. 2, 2010) (citations omitted); see also Careau & Co. v. Security Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1395 (1990) (“[i]f the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated”).
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page17 of 29 Here, plaintiffs’ claim for breach of the implied covenant (Count III) simply restates under a different label the same inadequate allegations advanced in Counts I and II as purported breaches of express warranty. Moreover, the express warranties invoked by plaintiffs provide explicitly that the statements of warranty therein “are exclusive and in lieu of all other remedies,” foreclosing reliance on implied terms. Blake Decl. Exs. A, B, C & D. The Limited Warranty states that “any implied warranties are limited to the express terms of the Limited Warranty.” Id.
Ex. A. Because plaintiffs’ claim for breach of the implied covenant is, at best, “superfluous,” Count III should be dismissed with prejudice.
PLAINTIFFS FAIL TO STATE A CLAIM UNDER THE CLRA AND UCL
No Allegation Of Pre-Sale Knowledge
Plaintiffs’ CLRA and UCL claims fail at the threshold because plaintiffs have failed to make any allegation—much less allegations with the particularity required by Rule 9(b)—that Ducati knew that an alleged misstatement or omission was false and intended to deceive plaintiffs at the time of sale. See Kent, 2010 WL 2681767 at *7 (“CLRA proscribes active misrepresentations about the standard, quality, or grade of goods”) (emphasis added); Klein v. Earth Elements, Inc., 59 Cal. App. 4th 965, 969–70 (1997) (no UCL violation for “unintentional distribution of [defective or] unmerchantable” product). The Ninth Circuit has held that CLRA and UCL claims of nondisclosure that are “couched in general pleadings alleging [defendant’s] intent to conceal from customers . . . do not satisfy the heightened pleading requirements of Rule 9(b).” Kearns, 567 F.3d at 1127. Here, plaintiffs attempt to brush aside the particularity requirements for allegations of pre-sale knowledge of a purported defect by doing exactly what the U.S. Supreme Court, the Ninth Circuit, and this Court have recently reaffirmed is prohibited— using conclusory terms like “long known or should have known” (Am. Compl. ¶ 20), “exclusive access to information” (id. ¶ 21), “actively concealed” (id. ¶ 80), and “exclusive knowledge” (id.)—without alleging facts that “plausibly establish” such conclusions. Iqbal, 129 S. Ct. at 1951; see also Kearns, 567 F.3d at 1124; Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 974 -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page18 of 29 To avoid dismissal, plaintiffs must allege much more than conclusory statements. They must provide specific facts showing that Ducati knew or believed that the tanks were defective before plaintiffs purchased their motorcycles, and that Ducati concealed that information “in [the] transaction[s]” that resulted in plaintiffs’ purchases. Daugherty v. Am. Honda Motor Co., 144 Cal.
App. 4th 824, 837 n.6 (2006); see also Baba v. Hewlett-Packard Co. (“Baba I”), No. 09-5946, 2010 WL 2486353, at *7 (N.D. Cal. June 16, 2010) (dismissing CLRA and UCL claims where complaint lacked specific “averments that [defendant] knew of the alleged defects at the time [plaintiffs] purchased their [products] or contacted customer support”). The Amended Complaint lacks even a single specific “who/what/where/when/why/how” detail concerning Ducati’s alleged knowledge of the alleged defect. Plaintiffs attempt to bootstrap the required pre-sale knowledge of a purported tank issue by asserting, in wholly conclusory terms, that Ducati has “concealed the incompatibility” of plastic tanks with motorcycle fuel by implementing “repair practices” under the Limited Warranty under which it installs “a replacement tank made of the same incompatible material.” Am. Compl. ¶¶ 24, 26. As a matter of law, even if these allegations were sufficiently specific, they do not address Ducati’s pre-sale knowledge.
In Oestreicher, the court dismissed with prejudice CLRA and UCL claims based on stock allegations—all repeated here—that defendant had “exclusive knowledge;” “actively concealed the defect by failing to disclose;” and “intended to defraud in order to increase its own profits.” 544 F. Supp. 2d at 974; see also Am. Compl. ¶¶ 20, 21, 80. This Court observed that “allegations of this nature . . . could be made about any alleged design defect in any manufactured product.
The heightened pleading requirements of Rule 9(b) were designed to avoid exactly this situation.” Id. As in Oestreicher, plaintiffs have failed to specify any factual basis to support their conclusions that Ducati had “exclusive knowledge” of the alleged tank issue or that it “actively concealed” such information to induce plaintiffs to purchase their motorcycles. See Am. Compl. ¶ 80. Numerous courts, including this Court, agree that such boilerplate allegations warrant dismissal. See, e.g., Berenblat v. Apple, Inc., No. 08-4969, 2010 WL 1460297, at *5–10 (N.D.
Cal. Apr. 9, 2010) (Fogel, J.) (dismissing claim under all three UCL prongs where, as here, the “key alleged omissions and misrepresentations include[d] failing to inform consumers of the -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page19 of 29 defect and continuing to sell a product that [defendant] knew to contain a defect that would cause the product to malfunction”); Tietsworth v. Sears, Roebuck and Co. (“Tietsworth II”), No. 09- 0288, 2009 WL 3320486, at *4, *7, *9 (N.D. Cal. Oct. 13, 2009) (Fogel, J.) (rejecting CLRA and UCL concealment allegations based on “conclusory” and “general allegations of ‘exclusive knowledge as the manufacturer’ and active concealment of a defect,” because if sufficient it “would mean that any unsatisfied customer could make a similar claim every time a product Allegations of knowledge based on comments allegedly posted by Ducati customers on a National Highway Traffic Safety Administration (“NHTSA”) website are equally inadequate.
Am. Compl. ¶ 19. Courts have consistently rejected such allegations, stating that “[r]andom anecdotal examples of disgruntled customers posting their views on websites at an unknown time is not enough to impute knowledge upon defendants.” Oestreicher, 544 F. Supp. 2d at 974 n.9.4 Here, Plaintiff has not identified any comment that was posted prior to the date either plaintiff purchased his motorcycle, or any basis to support its credibility. Moreover, plaintiffs’ use of these postings (which they allege have been entered since 2006—before either plaintiff purchased his motorcycle (Am. Compl. ¶ 22)) is incompatible with their contention that Ducati had “exclusive knowledge” at the time of their purchases. Random comments on third-party websites are insufficient as a matter of law to support a claim that Ducati knowingly sold plaintiffs a motorcycle with a defective tank, because they say nothing at all about Ducati’s knowledge of the alleged defect. See Berenblat, 2010 WL 1460297, at *9 (dismissing UCL claim, because even defendant’s removal of “a thread of 350+ complaints about the [alleged] defect on [defendant’s consumer] website . . . merely establish[es] the fact that some consumers were complaining” and See also Baba II, 2011 WL 317650, at *3 (scores of “anecdotal complaints without dates or any other information are insufficient to allege that [defendant] possessed knowledge ofthe putative defect”); Kent, 2010 WL 2681767, at *8 (“a series of online postings that complain of [product] failures” must be disregarded where plaintiffs “do not allege that[defendant] knew of these complaints at the time” of sale); Long v. Hewlett Packard and Co. (“Long I”), No. 06-2816, 2006 WL 4877691, at *1, *3 (N.D. Cal. July 27, 2007)(allegations that company learned of the defect through thousands of calls and by conducting thousands of repairs related to the alleged defect were insufficient to supportclaim that company “knew about the relevant defects (and made misrepresentations) when Plaintiffs in particular purchased their [product]”) (emphasis added).
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page20 of 29 “are insufficient to show that [defendant] had knowledge that the [product] in fact was defective and sought to conceal that knowledge from consumers”).5 Claims That Ducati’s Actions Under Its Repair Or Replace Warranty Were
Insufficient Cannot Support A CLRA Or UCL Claim
Plaintiffs’ CLRA and UCL claims principally rely on the allegation that Ducati failed to meet its warranty obligations by “installing a replacement fuel tank that uses the same defective plastic material.” Am. Compl. ¶ 87. As a threshold matter, plaintiffs cannot pursue these statutory claims based on post-sale performance under a warranty. See Baba I, 2010 WL 2486353, at *7 (dismissing CLRA and UCL claims, ruling that “alleged post-transaction behavior . . . is irrelevant to the question of whether [defendant] made false statements to plaintiffs before or during their respective transactions which induced them to purchase” the product).
Courts have consistently rejected attempts, as here, to transform a contractual dispute about performance under the terms of a Limited Warranty into a CLRA or UCL claim. See, e.g., Baba I, 2010 WL 2486353, at *4 (“[T]he failure to fulfill promises under a limited warranty is simply a contractual breach that does not become actionable under CLRA without proof of more, such as the fact that the defendant sold a product it was aware was defective.”); Kent, 2010 WL 2681767, at *8 (same); Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099, 1104 (N.D. Cal. 2007) (CLRA claim based on warranty was an impermissible attempt “to bootstrap [the manufacturer’s] express warranty into a representation that the [products] are defect-free”). Moreover, any plaintiff who has received the “benefit of the bargain” under its warranty has not “lost money or property” and Similarly, plaintiffs’ assertion that “chemical principles well known in the industry” (Am.
Compl. ¶ 3) and “[s]tandard pre-release field testing would have revealed the problem” (id.
¶ 20) (emphasis added) prior to sale are nothing more than ipse dixit conclusions thatcannot withstand a motion to dismiss. Twombly, 550 U.S. at 557. Plaintiffs do not allege any facts regarding Ducati’s manufacturing or testing processes at the time of plaintiffs’purchases, what the results of those processes were, or how that information supposedly gave Ducati actual knowledge that every fuel tank on every model was defective. Kent,2010 WL 2681767, at *8 (rejecting such testing allegations because “they do not allege any specific facts to support their claim: they do not explain how the [products] in suitwere inadequately manufactured or what testing was done or should have been done -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page21 of 29 therefore lacks standing. Baggett v. Hewlett-Packard Co., No. 07-0667, 2009 WL 3178066, at The Amended Complaint alleges nothing more than that plaintiffs disagree with the way Ducati performed its “repair or replace” obligations under the Limited Warranty. Am. Compl.
¶¶ 2, 27. Plaintiffs do not identify any non-warranty representation that Ducati made to them regarding their motorcycles. Nor do they allege that Ducati has engaged in any conduct aside from its alleged failure to provide a different kind of replacement tank than it provided. This is nothing more than an alleged breach of a contractual warranty (which allegation is itself deficient for the independent reasons discussed at § II, supra), wholly lacking particularized allegation of some additional “deceptive act[] or practice,” Cal. Civ. Code § 1770(a), and cannot support a CLRA or UCL claim. See, e.g., KEMA, Inc. v.Koperwhats, 658 F. Supp. 2d 1022, 1033 (N.D.
No Duty To Disclose Is Alleged
Plaintiffs’ allegation that Ducati concealed facts from plaintiffs about the existence of an alleged issue with plastic fuel tanks installed on its motorcycles fails for the additional reason that the Amended Complaint alleges no facts that would support a duty to disclose under the CLRA or A duty to disclose arises only in two situations: (1) where the alleged concealed fact is “contrary to a representation actually made by the defendant” and, (2) where the “defendant was obliged to disclose” the defect because it presented a safety issue. Oestreicher, 544 F. Supp. 2d at 969; Morgan v. Harmonix Music Sys., Inc., No. 08-5211, 2009 WL 2031765, at *4 (N.D. Cal. July 7, 2009) (“According to all relevant case law, defendants are only under a duty to disclose a known defect in a consumer product when there are safety concerns associated with the product’s use.”). The Amended Complaint does not identify a single affirmative representation by Ducati about the fuel tank’s quality or characteristics, much less a material representation made with knowledge of its falsity. See Tietsworth v. Sears, Roebuck and Co. (“Tietsworth III”), 720 F.
Supp. 2d 1123, 1137 (N.D. Cal. 2010) (Fogel, J.) (misrepresentation must “directly” relate to allegedly defective component or part); Oestreicher, 544 F. Supp. 2d at 973 (dismissing CLRA -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page22 of 29 and UCL claims where, as here, “Plaintiff has provided no specific statement or absolute characteristic regarding” the relevant product component).
Plaintiffs cannot avoid dismissal by sprinkling the Amended Complaint with conclusory allegations that the purported fuel tank issue described in their pleading poses a safety risk to consumers. See, e.g., Am. Compl. ¶¶ 2, 4, 28, 58. First, neither plaintiff alleges that his motorcycle has actually experienced any injury or safety problem resulting from his fuel tank, and consequently neither plaintiff has standing to assert such any claims based on the nondisclosure of the alleged safety defect. See Tietsworth II, 2009 WL 3320486, at *5.
Second, despite proposing a putative class that includes every owner and lessee of any model Ducati motorcycle for eight years, plaintiffs’ conclusory assertion of safety “risks,” “hazards,” and “implications” (Am. Compl. ¶¶ 4, 15, 24), is not supported by an allegation, even on information and belief, of even one instance of personal injury or safety-related incident resulting from the fuel tank issue described in the Amended Complaint. As this Court has recognized, a plaintiff must plead specific facts to make a credible safety claim as a basis for imposing a disclosure obligation under the CLRA and UCLA. In Tietsworth II, this Court analyzed the standard for pleading UCL and CLRA claims based on alleged fraudulent omissions relating to a purported “safety defect,” and refused to credit a bald allegation—repeated here—of “unsafe conditions” (Am Compl. ¶¶ 2, 28), or the argument—also repeated here—that alleging the potential for “safety hazards” is sufficient to trigger a duty of disclosure. 2009 WL 3320486, at *5 (rejecting “duty to disclose” in absence of specific factual allegations that any named plaintiff or putative class member actually experienced the alleged “safety defect” purportedly posing “a serious personal safety risk” and “threatening very severe bodily injury”); see also Tietsworth III, 720 F. Supp. 2d at 1134 (same; rejecting safety-based disclosure obligation on motion to dismiss and finding “[p]laintiffs lack standing to pursue a claim based on the nondisclosure of the alleged -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page23 of 29 As in Tietsworth, plaintiffs simply employ the “safety risk” label (e.g., Am. Compl. ¶ 4), but allege no supporting events or facts, much less that they or any putative class member were personally injured or suffered damage to other property. This is insufficient.6 No Reliance On Any Ducati Representation Or Omission Is Alleged
The Amended Complaint fails to state claims under the CLRA and UCL for the additional reason that it contains no allegation that plaintiffs (or any other consumer) relied on any misrepresentation or omission by Ducati. See Baba I, 2010 WL 2486353, at *5 (dismissing CLRA and UCL claims where the complaint failed to allege reliance on any representations to plaintiffs “before or during their respective transactions” and improperly focused on defendant’s post-transaction manner of addressing the alleged defect). As demonstrated supra, the allegation that plaintiffs “were aware of” the warranty falls far short of showing, with particularity, that plaintiffs relied on any specific promise, as is required to state a CLRA or UCL claim and to meet the heightened particularity requirements of Rule 9(b). See Kent, 2010 WL 2681767, at *9, *12.
FLORIDA RESIDENT SUGARMAN’S CLRA AND UCL CLAIMS SHOULD BE
DISMISSED
California law has a presumption against the extraterritorial application of the State’s statutes. See J. P. Morgan & Co., Inc. v. Superior Court, 113 Cal. App. 4th 195, 221 (2003) (“a court should not ordinarily construe a statute as regulating occurrences outside the state unless a contrary intention is clearly shown”). The CLRA and UCL were neither designed nor intended to authorize claims of non-California residents arising from conduct occurring outside of California.
Plaintiffs’ failure to allege facts creating duty to disclose is fatal to their claim under allthree prongs of the UCL. Because the CLRA claim is meritless, it cannot be a basis for a UCL claim under the “unlawful prong.” Kent, 2010 WL 2681767, at *10. Additionally, amere alleged breach of a warranty is not “unlawful” under the UCL. Boland, Inc. v. Rolf C. Hagen (USA) Corp., 685 F. Supp. 2d 1094, 1111 (E.D. Cal. 2010) (“California courtshave held that a breach of contract is not itself ‘unlawful’ conduct for purposes of California’s UCL.”). Nor can a claim under the UCL’s “fraudulent” prong survive where,as shown above, Ducati made no affirmative representations regarding the tanks, and no actionable omission or duty to disclose is alleged. Berenblat, 2010 WL 1460297, at *8–9;Morgan, 2009 WL 2031765, at *5. Plaintiffs’ allegations also do not constitute a violation of the “unfair” prong because the non-disclosure of a fact that a defendant was not boundto disclose does not result in a “substantial injury.” See Daugherty, 144 Cal. App. 4th at 839; Morgan, 2009 WL 2031765, at *5.
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page24 of 29 See, e.g., Ice Cream Distributors of Evansville, LLC v. Dreyer’s Grand Ice Cream, Inc., No. 09- 5815, 2010 WL 3619884, at *8 (N.D. Cal. Sept. 10, 2010) (“UCL ‘does not apply to actions occurring outside of California that injure non-residents’”) (collecting cases); Am. Online, Inc. v. Super. Ct., 90 Cal. App. 4th 1, 14–15 (2001) (CLRA is a “legislative embodiment of a desire to Plaintiff Sugarman is a Florida resident (Am. Compl. ¶ 5) who purchased his motorcycle in Florida (id. ¶ 29); and at his request obtained a replacement tank at a Miami Ducati dealership (id.
¶ 31). No specific conduct giving rise to the claims alleged here is alleged to have occurred in California, and any purported economic injury arising from Sugarman’s receiving a replacement tank that he contends was inadequate occurred where he requested and obtained the warranty replacement: Florida. There is no allegation that (i) Sugarman’s motorcycle was manufactured in California; (ii) that the parties had any expectation that California law would apply to any future dispute when Sugarman purchased and serviced his motorcycle in Florida; or (iii) that any specific conduct regarding his fuel tank took place in California.
Courts have consistently rejected attempts by non-residents to create a California “hook” based on the California location of corporate headquarters combined with conclusory allegations as are made here that the decision to undertake the challenged conduct “emanated” from Apparently, Plaintiff believes that because [defendant’s] principal place ofbusiness is in California . . . the Court can presume that any false and misleading statements emanated from California. But the bulk of authority counsels againstmaking such an assumption. Although the fact that [defendant] does business in California gives California personal jurisdiction over [defendant], the SupremeCourt has specifically admonished that the existence of personal jurisdiction over a defendant does not alone permit application of the forum law to the claims ofnonresident plaintiffs.
Tidenberg v. Bidz.com, Inc., No. 08-5553, 2009 WL 605249, at *4 (C.D. Cal. Mar. 4, 2009).
If Sugarman’s allegations were sufficient to apply California law to his claims, then California law could be applied whenever a company is incorporated or headquartered in -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page25 of 29 California. This is not the law.7 Accordingly, Sugarman’s CLRA and UCL claims (Counts IV and V) should be dismissed with prejudice.
PLAINTIFFS’ PURPORTED CLASS ALLEGATIONS SHOULD BE STRICKEN
“Under Rules 23(c)(1)(A) and 23(d)(1)(D), as well as pursuant to Rule 12(f), this Court has authority to strike class allegations prior to discovery if the complaint demonstrates that a class action cannot be maintained.” Tietsworth III, 720 F. Supp. 2d at 1146. The U.S. Supreme Court has endorsed a critical examination of class allegations at the pleading stage, stating that “[s]ometimes the issues are plain enough from the pleadings to determine whether the interests of absent parties are fairly encompassed within the named plaintiffs’ claim.” Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982). Courts in this district have adhered to this guidance, and will strike class pleadings when it is clear the proposed class cannot be certified. See Tietsworth III, 720 F. Supp. 2d at 1146–48; Hovsepian, 2009 WL 5069144, at *6.
The Proposed Class Is Not Ascertainable by Reference to Objective Criteria
A threshold prerequisite to any proposed class is that membership in the proposed class be presently “ascertainable” by reference to objective criteria so that a court can determine without individualized inquiries whether a particular individual is a member of the class and thus has standing. See, e.g., Hovsepian, 2009 WL 5069144, at *2. “[N]o class may be certified that contains members lacking Article III standing . . . . The class must therefore be defined in such a way that anyone within it would have standing.” Sanders, 672 F. Supp. 2d at 991 (citation omitted). Courts have repeatedly stricken class allegations where the proposed class definition was too broad and contained class members who did not have standing. See, e.g., Stearns II, 2010 WL 2898284, at *20 (striking class allegations because “the class does not exclude persons who already have received refunds or replacement parts or who have not suffered any damages at all” See Ice Cream Distributors of Evansville, 2010 WL 3619884, at *8 (dismissing non- resident’s UCL claim because “bare allegation” does not “suggest that the fraudulentstatements were prepared in and emanated from California”); Johnson v. Hewlett-Packard Co., No. 09-3596, 2010 WL 2680772, at *4 (N.D. Cal. July 6, 2010) (same); Morgan,2009 WL 2031765, at *2 (dismissing non-resident’s CLRA claim against defendant headquartered in California where, as here, “complaint fails to allege what conduct of thedefendants, if any, that violated the CLRA took place in California or how [non-resident] -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page26 of 29 and is thus “not ascertainable.”); Hovsepian, 2009 WL 5069144, at *6 (striking class allegations where “the class is not ascertainable because it includes members who have not experienced any problems with [relevant product]. Such members have no injury and no standing to sue.”); Tietsworth III, 720 F. Supp. 2d at 1146; Sanders, 672 F. Supp. 2d at 991.
The class proposed here, on its face, fails these standards. The Amended Complaint describes the putative class indiscriminately as “[a]ll persons who purchased a Ducati motorcycle with a plastic fuel tank within the United States.” Am. Compl. ¶¶ 1, 38. That eight-year, all- model, all-fuel tank class definition is completely unbounded, sweeping in all Ducati customers regardless of whether they have actually experienced (1) any fuel tank problem; (2) a problem within the applicable warranty period, but received a repair or replacement under the Limited Warranty; or (3) problems after the expiration of a warranty period, and so have no claim for breach of that warranty. Equally fundamentally, plaintiffs have not alleged any facts from which the Court could reasonably infer that the alleged defect has manifested in a significant percentage of putative class members’ tanks. See, e.g., id. ¶¶ 18, 27 (alleging only how the alleged defect may Plaintiffs’ Putative Class Allegations Raise Predominantly Individualized
As this Court observed in striking class action allegations on the pleadings in a consumer action, “[c]ourts routinely hold that both fraud and warranty claims are difficult to maintain on a nationwide basis and rarely are certified.” Sanders, 672 F. Supp. 2d at 991; see also Tietsworth III, 720 F. Supp. 2d at 1146 (concluding on motion to strike that “express warranty claims are improper for class treatment” because such “claims involve elements that are individual to each purported class member”). This Court has stricken class allegations on the pleadings where, as here, the claims necessitate individualized factual and legal inquiries. See, e.g., Tietsworth III, 720 F. Supp. 2d at 1147–48, at *20; Stearns I, 2009 WL 1635931, at *19.
These shortcomings also necessitate striking the class allegations because plaintiffs’ claimsare not typical of the claims of the members of the putative class. See, e.g., In re Paxil Litig., 212 F.R.D. 539, 549 (C.D. Cal. Jan. 13, 2003).
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page27 of 29 On its face, the Amended Complaint establishes that class certification cannot be obtained here because the statutory and common law claims asserted present highly individualized factual and legal questions that must be litigated and resolved on a customer-by-customer basis under the laws of multiple jurisdictions, precluding a finding of class cohesiveness or predominance of common questions. Plaintiffs have proposed a nationwide class of every person in the United States who during an eight-year period purchased or leased any of Ducati’s 24 different models of motorcycles equipped with 16 different custom molded thermoplastic fuel tanks, with different conditions of use and with different warranty claims experiences. At a minimum, the claims of each putative class member will require individual adjudication of: (1) whether each customer’s fuel tank actually experienced the problem alleged in the (2) if so, the nature of the customer’s fuel and any additive use, and whether the customer’s improper use or care of the motorcycle, inappropriate fuel use,motorcycle modifications, extreme environmental conditions or causes other than fuel tank expansion due to normal fuel caused the problem; (3) whether any such problem occurred within the warranty period, and if so, whether any warranty exclusions are applicable (such as any motorcycle used in (4) whether each customer sought warranty service from an authorized Ducati dealer, and if so, whether the warranty repair or replacement provided by Ducati for each such consumer was satisfactory, and whether that customer has presented anyfurther problems not corrected by Ducati; and (5) whether the claims of each customer in this eight year class period are timely under applicable statute of limitations periods.
These required individual adjudications foreclose class certification. See, e.g., Tietsworth III, 720 F. Supp. 2d at 1147–48, at *20; Stearns I, 2009 WL 1635931, at *19; Hovsepian, 2009 WL Moreover, the unmanageable variety of individual issues presented is significantly compounded by plaintiffs’ proposed nationwide class. Against decisive authority, plaintiffs assert (Am. Compl. ¶¶ 46-50) that all claims of the putative nationwide class may be pursued under California law simply because Ducati is headquartered there and plaintiffs have alleged—in wholly conclusory terms that flout Rule 9(b)—that “the core decision not to disclose the fuel tank incompatibility” was made there. This is incorrect. Before a nationwide class can invoke the law-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page28 of 29 of a particular state, that state’s law must both (1) not conflict with the law of another jurisdiction that has an interest in the case, and (2) “have a ‘significant contact or significant aggregation of contacts’ to the claims asserted by each member of the plaintiff class . . . in order to ensure that the choice of [the forum state’s] law is not arbitrary or unfair.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 821–22 (1985). Plaintiffs’ complaint fails on both scores.
First, “there are material conflicts between” (i) “California’s warranty laws and the warranty laws of the other states,” and (ii) “California’s consumer protection laws and the consumer protection laws of the other forty-nine states.” In re Hitachi Telev. Optical Block Cases, No. 08-1746, 2011 WL 9403, at *6 (S.D. Cal. Jan. 3, 2011); see also Stearns I, 2009 WL 1635931, at *19 (striking class allegations in UCL and CLRA action because of, inter alia, “discrepancies in applicable state laws” and “the elements of proof with respect to the property damage alleged . . . likely will vary significantly among class members”). Second, plaintiffs have not alleged a “significant” contact with California supporting application of California law to non- residents. As this Court has noted, “[e]ach plaintiff’s home state has an interest in protecting its consumers from in-state injuries caused by foreign corporations and in delineating the scope of recovery for its citizens under its own laws.” In re HP Inkjet Printer Litig., No. 05-3580, 2008 WL 2949265, at *6 (N.D. Cal. July 25, 2008) (Fogel, J.) (unpublished) (quoting In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., 174 F.R.D. 332, 348 (D.N.J. 1997)).9 That is, “[i]f recovery for breach of warranty or consumer fraud is possible, the injury is decidedly where the consumer is located, rather than where the seller maintains its headquarters.” In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1018 (7th Cir. 2002); In re Pharm. Indus. Av’g Wholesale Price Litig., 230 F.R.D. 61, 83 (D. Mass. 2005) (“Courts have generally rejected application of the law of a defendant’s principal place of business to a nationwide class.”).
Because In re HP Inkjet Printer Litig. is an unpublished decision, Ducati does not cite it asbinding precedent, but instead brings it to the Court’s attention so that the Court may consider its reasoning in addressing the issue. Cf. Schwarzkopf v. Intern. BusinessMachines, Inc., No. 08-2715, 2010 WL 1929625, at *9 (N.D. Cal. May 12, 2010) (Fogel, J.) (“consider[ing] the legal reasoning of the two [unpublished] cases as persuasiveauthority”).
-NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37 Filed02/14/11 Page29 of 29 For the majority portion of the putative class that does not reside in California and purchased a Ducati motorcycle during the proposed class period, plaintiffs do not plead that these non-residents had any contact with California, let alone a “significant contact.” Util. Consumers’ Action Network v. Powernet Global Comm., No. 06-1773, 2006 U.S. Dist. LEXIS 78546, at *16 (S.D. Cal. Oct. 20, 2006) (striking class allegations for proposed nationwide UCL class; “[a]pplying the forum state’s laws to parties located beyond the state’s borders, who have no relationship with the forum state, would abrogate the parties’ rights under the Due Process and Full Faith and Credit [C]lauses”). Accordingly, plaintiffs’ class allegations should be stricken with prejudice. See In re HP Inkjet Printer Litig., 2008 WL 2949265, at *7 (“A proposed amendment to a class allegation may be deemed futile where even with the amendment class certification should be denied.”).
CONCLUSION
For all of these reasons, Ducati respectfully requests that the Court dismiss all of plaintiffs’ claims with prejudice or, alternatively, strike all purported class allegations from the Amended Complaint with prejudice, together with such other and further relief as the Court deems just and Mary Elizabeth McGarry (pro hac vice)Joseph M. McLaughlin (pro hac vice) New York, New York 10017Telephone: (212) 455-2000 Stephen P. Blake, 2600692550 Hanover Street Palo Alto, California 94304Telephone: (650) 251-5000 -NOT. OF MOT., MOT. & MP&A ISO MOT. TO DISMISS OR STRIKE Case5:10-cv-05246-JF Document37-1 Filed02/14/11 Page1 of 2 DAVID W. ICHEL (pro hac vice)[email protected] MARY ELIZABETH McGARRY (pro hac vice)[email protected] JOSEPH M. McLAUGHLIN (pro hac vice)[email protected] SIMPSON THACHER & BARTLETT LLP425 Lexington Avenue New York, New York 10017Telephone: (212) 455-2000 SIMONA G. STRAUSS, [email protected] STEPHEN P. BLAKE, [email protected] SIMPSON THACHER & BARTLETT LLP2550 Hanover Street Palo Alto, California 94304Telephone: (650) 251-5000 Attorneys for DefendantDUCATI NORTH AMERICA, INC.
of themselves and all others similarly situated, [PROPOSED] ORDER GRANTING
DEFENDANT DUCATI NORTH
AMERICA, INC.’S MOTION TO
DISMISS OR, ALTERNATIVELY, TO
STRIKE
[Filed Concurrently With: Notice ofMotion and Motion; Memorandum of Points and Authorities; Request forJudicial Notice; Blake Declaration] [PROPOSED] ORDER GRANTING MOT. TO DISMISS/STRIKE Case5:10-cv-05246-JF Document37-1 Filed02/14/11 Page2 of 2 PROPOSED ORDER
This matter came before the Court for hearing on April 22, 2011 at 9 a.m. on the motion to dismiss with prejudice the First Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b) or, alternatively, to strike all purported class allegations from the First Amended Complaint pursuant to Fed. R. Civ. P. 12(f) and 23(d)(1)(D), brought by Defendant Ducati North America, Inc. (“Ducati”). Having considered the papers and arguments submitted in support thereof, and in opposition thereto, and good cause appearing, it is accordingly ORDERED that:
_______ Ducati’s motion to dismiss for failure to state a claim under which relief can be granted pursuant to Rule 12(b)(6) and Rule 9(b) is GRANTED. Counts I-V of the First Amended
Complaint are hereby DISMISSED with prejudice.
_______ Ducati’s motion to strike class allegations from the First Amended Complaint pursuant to Fed. R. Civ. P. 12(f) and 23(d)(1)(D) is GRANTED. Plaintiffs’ class allegations are
STRICKEN from the First Amended Complaint. Leave to amend is DENIED.
[PROPOSED] ORDER GRANTING MOT. TO DISMISS/STRIKE

Source: http://www.ducati.ms/forums/attachments/sport-classic/85655d1299046630-out-warranty-spreading-tank-problems-sugarman-v-ducati-motion-dismiss.pdf