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rejecting challenge to damages calculation because “a reasonable jury could conclude that a consumer would demand that the purchase price of a vehicle with a defect be reduced by the cost of remedying that defect”
Summary of this case from Siqueiros v. Gen. MotorsOpinion
CIV. NO. 2:11-02890 WBS EFB
05-17-2016
MARGIE DANIEL, ROBERT MCCABE, MARY HAUSER, DONNA GLASS, and ANDREA DUARTE, individually and on behalf of a class of similarly situated individuals, Plaintiffs, v. FORD MOTOR COMPANY, a Delaware corporation, Defendant.
MEMORANDUM AND ORDER RE: RENEWED MOTION FOR SUMMARY JUDGMENT
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Plaintiffs Margie Daniel, Robert McCabe, Mary Hauser, Donna Glass, and Andrea Duarte brought this action against defendant Ford Motor Company ("Ford") on behalf of themselves and a class of similarly situated individuals in connection with an alleged rear suspension defect in the 2005-2011 Ford Focus. Defendant now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56.
I. Factual and Procedural Background
Plaintiffs are individuals who purchased new Ford Focus vehicles in California between 2005 and 2011. Plaintiffs allege that those vehicles have a rear suspension "alignment/geometry defect" that leads to premature tire wear, which in turn leads to safety hazards such as decreased control in handling, steering, and stability, as well as the threat of catastrophic tire failure. Plaintiffs bring claims for: (1) violation of the California Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750-1784; (2) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210; (3) breach of implied warranty under the Song-Beverly Consumer Warranty Act, Cal. Civ. Code §§ 1790-1795.8; (4) breach of warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312; and (5) breach of express warranty under California Commercial Code section 2313.
In an Order dated June 7, 2013, this court granted Ford's motion for summary judgment on all claims and entered final judgment in its favor. (Docket No. 84.) Plaintiffs successfully appealed that Order and the Ninth Circuit reversed this court's decision on all claims. Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir. 2015). Because this court's prior order and the Ninth Circuit's decision discuss the facts in this case in detail, the court will refrain from reciting them here.
Having unsuccessfully defended judgment in its favor on appeal, Ford now moves for summary judgment on the grounds the Ninth Circuit declined to address on appeal. Specifically, the Ninth Circuit did not examine the "duty to disclose, actual damages, statutorily-required notice, statute of limitations, equitable restitution, and sufficiency of the evidence of tire wear." Id. at 1227. Plaintiffs Hauser, Glass, and Duarte do not oppose entry of judgment in favor of Ford on all of their claims, (Pls.' Opp'n at 1:4-5), and the court will thus grant Ford's motion for summary judgment on all claims by those plaintiffs. Plaintiff Daniel opposes Ford's motion for summary judgment and this Order is thus limited to the grounds upon which Ford moves for summary judgment against Daniel. (Id. at 1:5-6.)
II. Analysis
Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party moving for summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact and can satisfy this burden by presenting evidence that negates an essential element of the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Alternatively, the moving party can demonstrate that the non-moving party cannot produce evidence to support an essential element upon which it will bear the burden of proof at trial. Id.
Once the moving party meets its initial burden, the burden shifts to the non-moving party to "designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 324 (quoting then-Fed. R. Civ. P. 56(e)). To carry this burden, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson, 477 U.S. at 252.
In deciding a summary judgment motion, the court must view the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in its favor. Id. at 255. "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment . . . ." Id.
A. CLRA and UCL Claims
The CLRA prohibits certain "unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services." Cal. Civ. Code § 1770(a). The CLRA's list of proscribed practices include "[r]epresenting that goods or services have . . . characteristics . . . uses, benefits, or qualities which they do not have," id. § 1770(a)(5), and "[r]epresenting that goods or services are of a particular standard, quality, or grade," id. § 1770(a)(7). The UCL proscribes as unfair competition "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof. Code § 17200.
1. Duty to Disclose
"[A] manufacturer cannot be found liable under the CLRA for failure to disclose a defect that manifests itself after expiration of the warranty period unless such omission (1) is 'contrary to a representation actually made by the defendant' or (2) pertains to a fact the defendant was obligated to disclose.'" Smith v. Ford Motor Co., 749 F. Supp. 2d 980, 987 (N.D. Cal. 2010), aff'd, 462 F. App'x 660 (9th Cir. 2011) (quoting Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 835-36 (2006)). Here, plaintiffs do not allege Ford made misrepresentations and contend only that Ford had a duty to disclose the alleged rear suspension defect and failed to do so.
There is a duty to disclose under the CLRA and UCL in four different circumstances:
(1) when the defendant is the plaintiff's fiduciary;Collins v. eMachines, Inc., 202 Cal. App. 4th 249, 255 (3d Dist. 2011). "[F]or the omission to be material, the failure must pose 'safety concerns.'" Smith, 749 F. Supp. 2d at 987 (quoting Oestreicher v. Alienware Corp., 322 F. App'x 489, 493 (9th Cir. 2009)); accord Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th Cir. 2012) ("California federal courts have generally interpreted Daugherty as holding that [a] manufacturer's duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue." (internal citations and quotations omitted)).
(2) when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff;
(3) when the defendant actively conceals a material fact from the plaintiff; and
(4) when the defendant makes partial representations that are misleading because some other material fact has not been disclosed.
Citing Rutledge v. Hewlett-Packard Co., 238 Cal. App. 4th 1164 (6th Dist. 2015), Daniel contends in a footnote that a fraudulent omission claim may no longer require that the defect be related to a safety concern. Because the court finds that Daniel has established a triable issue of material fact with respect to whether the defect in this case involved a safety concern, it need not address this argument.
a. Materiality
Although the Ninth Circuit did not address whether Ford had a duty to disclose, when concluding plaintiffs had established a triable issue of fact as to reliance on their CLRA and UCL claims, it found that "[a] reasonable fact finder could infer that a vehicle that experiences premature and more frequent tire wear would pose an unreasonable safety risk." Daniel, 806 F.3d at 1226. The Ninth Circuit specifically found that plaintiffs had established a genuine issue of material fact on the two "sub-element[s]" of reliance: (1) that plaintiffs "would have been aware of a disclosure by Ford"; and (2) that plaintiffs "would have behaved differently if Ford had disclosed the alleged defect." Id. Whether the alleged defect posed an unreasonable safety risk was relevant to the Ninth Circuit's analysis because, as the court explained, "[t] hat one would have behaved differently can be presumed, or at least inferred, when the omission is material" and "[a]lleged defects that create 'unreasonable safety risks' are considered material." Id. at 1225 (citations omitted).
Although the Ninth Circuit made this finding in the context of reliance, Ford has not cited a single case articulating a distinction between materiality under the CLRA and UCL for purposes of a duty to disclose versus reliance. In fact, when defining "materiality" for purposes of reliance, the Ninth Circuit expressly relied on the definition of "materiality" from a case discussing the duty to disclose. See id. at 1126 (citing Wilson, 668 F.3d at 1141-43 as "holding in the duty-to-disclose context that an omission must pose safety concerns to be material"). The court would be at a loss to articulate how the Ninth Circuit's finding that a reasonable jury could infer that the alleged defect posed an unreasonable safety risk and was thus material for purposes of reliance does not apply equally to the safety risk necessary to establish materiality in the context of a duty to disclose.
Ford nonetheless argues that this finding was merely dicta and therefore not the law of the case. (See Def.'s Reply at 4:12-5:2 (citing cases).) While Ford argues that the parties did not dispute this "sub-element" of reliance and the Ninth Circuit "had no need to address this issue," the Ninth Circuit obviously considered the issue necessary and did not believe it was "undisputed" as Ford now claims.
Ford points out that it never raised this aspect of reliance in its motion for summary judgment and plaintiff informed the Ninth Circuit that there was "'no dispute that each Plaintiff satisfied the second [sub-element of reliance] by declaring that she would not have purchased a Ford Focus had she been informed of the suspension defect.'" (Def.'s Reply at 4:6-8 (quoting Appellant's Opening Br. at 10).) It is not surprising that plaintiffs would argue that an issue on which they have the burden is "undisputed." Ford does not indicate that it stated in its appellate brief that it did not dispute this sub-element. Without such an express admission on a necessary sub-element, the court can see why the Ninth Circuit felt it necessary to address it.
Nonetheless, even assuming that this conclusion is not the law of the case, this court denies Ford's invitation to reexamine the evidence that the Ninth Circuit considered. Although Ford argues the Ninth Circuit "had no reason to (and did not) consider in detail the evidence relevant to whether the alleged defect poses an unreasonable safety risk," (id. at 5:3-4), Ford does not deny that the very evidence it now relies on was before the Ninth Circuit. While the Ninth Circuit may not have cited the record or discussed the intricacies of the expert evidence in its decision, there is little question that it considered the evidence in reaching its decision:
A reasonable fact finder could infer that a vehicle that experiences premature and more frequent tire wear would pose an unreasonable safety risk, such that it can be presumed that the nondisclosure of the safety risk impacted Plaintiffs' purchasing decision. Plaintiffs have put forth sufficient evidence, when viewed in a light most favorable to them, that the Focus experienced premature and more frequent tire wear, and that Ford circulated special service messages to its authorized dealerships informing them that "some 2005-2011 Focus vehicles may exhibit premature front/rear tire wear and/or a vehicle drift condition when driving on wet or snow packed roads." Plaintiffs' experts opined that worn tires can pose a safety hazard in terms of road and weather conditions and potential blowouts. Even Ford acknowledges that "it can be dangerous to let the tires on any vehicle become excessively worn before replacing them."Daniel, 806 F.3d at 1226.
Accordingly, because "[a] reasonable fact finder could infer that a vehicle that experiences premature and more frequent tire wear would pose an unreasonable safety risk," id. at 1226, Daniel has established a triable issue of fact with respect to whether the alleged defect was material for purposes of establishing Ford's duty to disclose.
b. Exclusive Knowledge
A plaintiff can prevail on a CLRA or UCL claim based on a material omission if the defendant had exclusive knowledge of the defect. Ford does not dispute that it "was aware of a tire wear problem" at the time Daniel purchased her vehicle in January 2011. It argues that it nonetheless did not have exclusive or superior knowledge of the "tire wear issues."
Generally, courts have not defined "exclusive" literally, but have found such claims cognizable if the defendant had "superior" knowledge of a defect that was not readily apparent and there is no or only a limited publicly available information about the defect. See, e.g., Falk v. Gen. Motors Corp., 496 F. Supp. 2d 1088, 1096-97 (N.D. Cal. 2007) ("[Because] GM 'was in a superior position to know' that its speedometers might fail, plaintiffs successfully state a CLRA claim for omission of a material fact which lay within GM's exclusive knowledge.") (emphasis added); In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Prods. Liab. Litig., 754 F. Supp. 2d 1145, 1174, 1192 (C.D. Cal. 2010) ("Plaintiffs establish a duty to disclose because they allege that Toyota has superior knowledge of the SUA defects. . . . Plaintiffs have sufficiently alleged that Toyota knew significantly more about the alleged SUA defect than the limited information that was eventually shared with the public") (emphasis added).
In Falk, plaintiffs brought CLRA and UCL claims against General Motors based on an alleged defect in its speedometers that caused the speedometers to stop working properly after 45,000 miles or more. 496 F. Supp. 2d at 1092. The plaintiffs had alleged that consumers had raised "many complaints" about the speedometers on the Internet and that the plaintiffs could and even may have read those complaints. The court nonetheless found that General Motors had "exclusive" knowledge for purposes of the duty to disclose because plaintiffs alleged that General Motors had "known a lot more about the defective speedometers, including information unavailable to the public." Id. at 1097. The court further reasoned that "[m] any customers would not have performed an Internet search before beginning a car search" and they were not required to do so under the CLRA. Id. The court ultimately found that plaintiffs had sufficiently alleged exclusivity based on General Motors' "superior position" to know that its speedometers might fail. Id. at 1096-97.
Here, Ford argues it lacked exclusive knowledge because former plaintiff Robert McCabe testified that in September 2009, technicians at Les Schwab Tires told him that "Focuses were known for wearing out tires early." (McCabe Dep. at 147:21-148:15 (Docket No. 47-8).) Ford also relies on allegations in plaintiffs' motion for class certification that, by 2010, some Ford technicians were informing consumers that "rapid rear tire wear is a normal characteristic" of the Focus and there was "widespread acknowledgement among Ford dealers that the C170 Focus was indeed a tire eater." (Pls.' Mot. for Class Cert. at 5:8, 6:1-2 (Docket No. 33).)
Allegations in the opposing party's motion for class certification is hardly the type of "evidence" the court would expect to see in support of a motion for summary judgment. Nonetheless, plaintiffs cite excerpts from various reports in support of these statements and the court could consider that evidence at summary judgment.
Compared to Falk, in which complaints were made publicly about the defect, comments by technicians about the rapid tire wear on the Focus does not even suggest that the technicians were aware that a rear suspension defect was allegedly causing the tire wear. Moreover, the court in Falk found that complaints on the Internet about the defective component did not defeat plaintiffs' claim that the manufacturer had exclusive knowledge. Those complaints were readily accessible to any prospective purchaser who performed an online search. Here, a prospective purchaser might have learned about the tire problem only if he happened to talk to a technician or Ford dealer who happened to mention it. If the CLRA and UCL do not require prospective customers to search the internet for complaints, they surely do not require them to contact numerous technicians to find out if any of them happen to know of any tire issues or, more importantly, an undisclosed rear suspension defect.
Similarly, Ford claims it did not have exclusive knowledge of the rear suspension defect because, according to the allegations in plaintiffs' Complaint, consumers had filed complaints about the "defective condition" of the Focus with the National Highway Traffic Safety Association ("NHTSA") and those consumer complaints were available on the internet. (See Compl. ¶ 37 (Docket No. 1).) Even assuming the court could consider such allegations from plaintiffs' Complaint at summary judgment, the ability of a prospective purchaser to find complaints made to the NHTSA on the Internet does not preclude a finding of exclusivity. See In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Prods. Liab. Litig., 754 F. Supp. 2d at 1192 ("While prospective customers could have been tipped off to the possibility of SUA by researching past complaints filed with NHTSA, many customers would not have performed such a search, nor would they be expected to.").
Ford also relies heavily on Gray v. Toyota Motor Sales, U.S.A., Civ. No. 08-1690 PSG JCX, 2012 WL 313703 (C.D. Cal. Jan. 23, 2012), aff'd, 554 F. App'x 608 (9th Cir. 2014). In Gray, the plaintiffs brought CLRA, UCL, and fraudulent concealment claims based on the failure of the Toyota Prius Hybrid to meet the EPA's estimated 55 miles per gallon ("MPG") under real world driving conditions. The court dismissed plaintiffs' claims premised on a fraudulent omission theory because the claims did not involve a warranty or safety-related defect. Id. at *3-5. On plaintiffs' fraudulent concealment claim, which requires the same duty to disclose as the CLRA and UCL, the court assumed that a claim for fraudulent concealment was cognizable in the absence of a safety defect and, on that assumption, assessed whether the plaintiffs had sufficiently alleged that Toyota had exclusive knowledge. Id. at *8.
The Gray court ultimately found that the plaintiffs could not show Toyota possessed exclusive knowledge of the underperformance of the Prius Hybrid. Id. at *8-9. It did so, however, only after finding that the "newsworthiness" about the Prius Hybrid's underperformance had received "mainstream-media attention" and was "public information." Id. at *8. Two years prior to the plaintiffs having purchased their vehicles, Consumer Reports had "publically revealed" that the discrepancy between the EPA estimates and real-world figures was "much, much bigger" than for other vehicles and USA Today had reported that a real-world driving test revealed an MPG of only 38. Id. Unlike in Gray, Ford contends only that some technicians and dealers were aware of the Focus's poor tire wear. Ford does not suggest or provide any evidence suggesting that the Focus's rear suspension defect was reported in mainstream media and had become public information prior to Daniel having purchased her vehicle.
Ignoring the Gray court's finding that the underperformance of the Prius Hybrid was "public information" two years prior to the plaintiffs' purchases of their vehicles, Ford attributes undue weight to the Gray court's statement that "[t]he Prius's real-world MPG can be readily and immediately observed by a layman." Id. at *9. The Gray court emphasized the obviousness of the Prius Hybrid's real-world fuel performance not as the sole ground upon which it found that the plaintiffs could not allege exclusivity, but as a means to distinguish the case from Falk. The Gray court explained that the speedometers at issue in Falk "function[ed] as anticipated for 45,000-plus miles, before breaking unexpectedly after a consumer has exceeded their warranty coverage," whereas the Prius Hybrid's underperformance was immediately apparent upon first driving the Prius. Id.
Here, any rear suspension defect and consequent tire wear would not have been immediately apparent upon driving a Focus, but would have required thousands of miles of use before a problem might be suspected. Even then, when tire wear might have been noticeable, a reasonable consumer would be unlikely to realize that the premature tire wear was the result of a rear suspension defect. Moreover, even if Gray was not so readily distinguishable, the language Ford relies on was not necessary to the decision and, while the Ninth Circuit affirmed the decision, it neither discussed nor approved of the district court's analysis of exclusivity. See Gray v. Toyota Motor Sales, U.S.A., Inc., 554 F. App'x 608, 609 (9th Cir. 2014) (affirming the district court because, "under the statutes pled, California law does not recognize a cause of action for publicizing EPA fuel economy estimates and omitting further explanation").
Similar to Gray, the district court in Herron v. Best Buy Co. also found that the plaintiff could not allege exclusive knowledge of the test conditions under which a laptop battery was tested. 924 F. Supp. 2d 1161, 1175 (E.D. Cal. 2013). In his complaint, however, the plaintiff had alleged that the defendant had disclosed the testing that was used and, nine months before the plaintiff purchased his laptop, "Newsweek [had] published an article publicly criticizing the [] test [defendant used] for the same reasons raised [] by Plaintiff." Id. The Herron court also found that because the defect was underperformance of the estimated battery life under real-world use, the "Plaintiff could have readily recognized any deficiencies in his Laptop's battery life." Id. Not only was the testing method used in Herron disclosed on the defendant's website, Herron was similar to Gray in that it involved a readily apparent defect that had been reported in mainstream media prior to the plaintiff's purchase.
Daniel has therefore established a triable issue of fact with respect to Ford's duty to disclose a material defect of which it had exclusive knowledge for purposes of her CLRA and UCL claims.
Because the court concludes that Daniel's CLRA and UCL claims withstand summary judgment on the theory that Ford failed to disclose a material fact of which it had exclusive knowledge, the court need not address Daniel's alternative theory that Ford actively concealed a material fact.
2. Damages
a. CLRA Damages
Relying on the measure of damages provided for in California Civil Code section 3343 when a person is "defrauded in the purchase, sale or exchange of property," Ford argues that Daniel's CLRA claim fails because she cannot prove loss as calculated under section 3343. The CLRA provides, however, that "[a]ny consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action" to recover "(1) Actual damages, . . . [;] (2) An order enjoining the methods, acts, or practices[;] (3) Restitution of property[;] (4) Punitive damages[; or] (5) [a]ny other relief that the court deems proper." Cal. Civ. Code § 1780(a) (emphasis added).
As California courts have repeatedly explained, "[t]he damage that a plaintiff in a CLRA action must show under Civil Code section 1780, subdivision (a) is any damage, which is not synonymous with actual damages and may encompass harms other than pecuniary damages." Id. (internal quotation marks omitted); accord Meyer v. Sprint Spectrum L.P., 45 Cal. 4th 634, 640 (2009). The showing of damage or actual injury under the CLRA is therefore not "governed by Civil Code section 3343, i.e., the measure of actual damages for persons defrauded in the purchase of property." In re Steroid Hormone Prod. Cases, 181 Cal. App. 4th 145, 155 (2d Dist. 2010). Thus, even assuming Daniel could not prove damages under section 3343--which Daniel strongly disputes--she has submitted sufficient evidence to create a triable issue of fact as to whether she incurred "any damage" necessary to sustain a CLRA claim. (See, e.g., Webb Expert Report at 3 (Docket No. 33-6) (estimating that the alternative design replacement retrofit costs to address the alleged defect range from $845 to $1167).)
In Paz v. Playtex Products, Inc., the court rejected the plaintiffs' use of gross sales revenue to calculate potential damages for purposes of the statutory minimum under the Class Action Fairness Act of 2005. Civ. No. 07-2133 JM BLM, 2008 WL 111046, at *3 (S.D. Cal. Jan. 10, 2008). Although the Paz court relied on section 3343(a) as the means to calculate potential damages, it did not hold that damages under the CLRA are limited to those provided in section 3343(a) or analyze that issue in any detail. See id.
Moreover, while section 3343 provides the "exclusive measure of damages for fraud cases," Cent. Mut. Ins. Co. v. Schmidt, 152 Cal. App. 2d 671, 676 (1st Dist. 1957) (quoting Bagdasarian v. Gragnon, 31 Cal. 2d 744, 762 (1948)), Ford has not cited a single decision from the California Supreme Court or California appellate courts holding that section 3343 also provides the exclusive measure of damages for CLRA claims. The Ninth Circuit has also noted that even though CLRA and UCL claims may "said to be 'grounded in fraud' or to 'sound in fraud, . . . [f]raud is not an essential element of a claim under these statutes." Vess v. CibaGeigy Corp. USA, 317 F.3d 1097, 1103, 1105 (9th Cir. 2003). The court will therefore not interpret "any damage" in the CLRA as measurable only under the calculation provided for fraud claims in section 3343.
b. Restitution Under the UCL
Under the UCL, "restitution is the only monetary remedy expressly authorized" and "[a] court cannot, under the equitable powers of section 17203, award whatever form of monetary relief it believes might deter unfair practices." Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1146, 1148 (2003) (internal quotation marks and citation omitted). "[A]n order for restitution is one 'compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.'" Id. at 1149 (quoting Kraus v. Trinity Mgmt. Servs., Inc., 23 Cal. 4th 116, 126-27 (2000)). "The object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest." Id.
An award of restitution under the UCL "must be of a measurable amount to restore to the plaintiff what has been acquired by violations of the statutes, and that measurable amount must be supported by evidence." Colgan v. Leatherman Tool Grp., Inc., 135 Cal. App. 4th 663, 698 (2d Dist. 2006). In calculating restitution, "California law requires only that some reasonable basis of computation of damages be used, and the damages may be computed even if the result reached is an approximation." Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 989 (9th Cir. 2015) (internal quotation marks and citation omitted). "[T]he fact that the amount of damage may not be susceptible of exact proof or may be uncertain, contingent or difficult of ascertainment does not bar recovery." Id. (internal quotation marks and citation omitted).
With a UCL claim based on a fraudulent omission, the Ninth Circuit has recently explained that "restitution is based on what a purchaser would have paid at the time of purchase had the purchaser received all the information." Id.; see also Chowning v. Kohl's Dep't Stores, Inc., Civ. No. 15-08673 RGK SPX, 2016 WL 1072129, at *10 (C.D. Cal. Mar. 15, 2016) ("To determine Plaintiff's loss for purposes of restitution, the focus should be on what Plaintiff actually received given the price she paid, not on the bargain Plaintiff thought she was receiving.").
Here, Daniel estimates that the alternative design replacement retrofit cost to address the alleged defect ranges from $845 to $1167. (Webb Expert Report at 3.) While this might not be the most probative evidence of what a consumer would have paid for a Focus if Ford had disclosed the alleged defect, a reasonable jury could conclude that a consumer would demand that the purchase price of a vehicle with a defect be reduced by the cost of remedying that defect. Moreover, while Ford's expert opines that the defect did not affect the depreciation of the Focus, (Strombom Expert Report at 16-17 (Docket No. 48-3)), Daniel's expert criticizes this opinion, (Leamer Rebuttal Expert Report at 30 (Docket No. 58-2)), and depreciation value is not determinative of the purchase value. The court cannot weigh this conflicting and circumstantial evidence at summary judgment and thus the jury must ultimately determine the value of the Focus at the time of purchase.
Ford also contends restitution is not possible because Daniel paid the authorized Ford dealership for her Focus, not Ford. It is undisputed, however, that Ford sells and leases its vehicles to authorized dealerships and that Daniel purchased her Focus from an authorized Ford dealership. Taking all inferences in favor of Daniel, she has made the minimum showing necessary to establish a triable issue that funds she paid to the Ford dealership are traceable to Ford. Cf. Colgan, 135 Cal. App. 4th at 699 ("[W]hen in equity, the plaintiff can seek [restitution] 'in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession.'" (quoting Great-W. Life & Annuity Ins. v. Knudson, 534 U.S. 204, 213 (2002))).
While Daniel's theory of restitution may ultimately reveal itself to be a square peg unable to fit in the round hole, the court will not foreclose the claim at this stage and will deny Ford's motion for summary judgment with respect to plaintiff's request for restitution under the UCL.
3. Statutory Notice under the CLRA
The CLRA requires that a consumer notify the defendant in writing of the consumer's alleged CLRA claims thirty days prior to bringing a claim. Cal. Civ. Code § 1782. The notice "requirement exists in order to allow a defendant to avoid liability for damages if the defendant corrects the alleged wrongs within 30 days after notice, or indicates within that 30-day period that it will correct those wrongs within a reasonable time." Morgan v. AT&T Wireless Servs., Inc., 177 Cal. App. 4th 1235, 1261 (2d Dist. 2009). When a plaintiff fails to comply with CLRA's notice requirement, courts generally dismiss the plaintiff's complaint without prejudice to plaintiff refiling thirty days after giving notice. See, e.g., Reed v. Dynamic Pet Prods., Civ. No. 15-0987 WQH DHB, 2015 WL 4742202, at *8 (S.D. Cal. July 30, 2015); Morgan, 177 Cal. App. 4th at 1261; Doe 1 v. AOL LLC, 719 F. Supp. 2d 1102, 1110-11 (N.D. Cal. 2010).
Although Daniel alleged that she had provided the requisite notice under section 1782 in her Complaint, (see Compl. ¶ 98), the parties do not dispute that this allegation was false when the Complaint was filed on November 2, 2011. It is also undisputed that Daniel provided the requisite notice on December 10, 2012. Although Ford does not contend it suffered any prejudice as a result of Daniel's late notice, it nonetheless argues that her Complaint is subject to dismissal for failure to have satisfied the notice requirement prior to filing. While Ford recognizes the dismissal would ordinarily be without prejudice, it nonetheless suggests that Daniel cannot show the requisite good cause to justify amending her Complaint four-and-a-half years after filing it.
Ford's suggestion that Daniel's CLRA claims are defeated because of such a technicality hardly passes the straight face test. While Daniel failed to provide the requisite notice prior to filing the action, it is undisputed that Ford was aware of this failure by no later than January 19, 2012. (See Answer ¶ 98 (denying the allegation that Daniel provided notice).) Despite this knowledge, Ford did not raise the lack of pre-commencement notice until March 15, 2013 when it filed its first motion for summary judgment. Because the court granted Ford's motion for summary judgment on other grounds, it did not address the notice issue at that time. Ford should not be rewarded for sitting on its right to seek dismissal for over a year and then utilizing its own delay to claim that Daniel cannot show good cause to amend her Complaint. A defendant can waive notice under the CLRA, Outboard Marine Corp. v. Superior Court, 52 Cal. App. 3d 30, 41 (3d Dist. 1975), and, under the circumstances of this case, the court finds that Ford waived its right to pre-commencement notice.
Even if Ford did not waive its right to pre-commencement notice, dismissal of this Complaint would achieve nothing. Any dismissal would be without prejudice and the court would find good cause for plaintiff to file an amended complaint in light of Ford's delay in seeking dismissal and the even lengthier delay resulting from the appeal. Because Daniel has already provided notice and the Complaint alleges notice was provided, an amended complaint that is identical to the operative Complaint would be legally sufficient and Daniel could thus refile the operative Complaint as her First Amended Complaint. The court will not require such a meaningless and empty gesture. Accordingly, the court will deny Ford's motion for summary judgment with respect to the requisite CLRA notice.
B. Express Warranty Claim
Lastly, and with a rather cursory analysis, Ford seeks summary judgment on Daniel's express warranty claim because the warranty excludes coverage for "worn out tires." Ford made this same argument to the Ninth Circuit, which the Ninth Circuit apparently determined did not even merit discussion. (See Grant Decl. Ex. HH (Appellee's Br. on Appeal) ("On appeal, as below, Plaintiffs simply ignore that portion of the warranty that expressly provides that it 'does not cover . . . worn out tires.'"). Although Ford suggests the Ninth Circuit left this issue for resolution on remand like the numerous other issues it did not address on appeal, the Ninth Circuit held that the express warranty covered the design defect at issue in this case, Daniel, 806 F.3d at 1225, and did not include Ford's "worn out tire" argument in the express list of issues it declined to address, see id. at 1227 ("Because the district court did not address duty to disclose, actual damages, statutorily-required notice, statute of limitations, equitable restitution, and sufficiency of the evidence of tire wear, we decline to do so on appeal."). Accordingly, because the Ninth Circuit has held that the express warranty extends to the rear suspension design defect alleged in this case, the court will deny Ford's motion for summary judgment on Daniel's breach of express warranty claim.
IT IS THEREFORE ORDERED that defendant's motion for summary judgment be, and the same hereby is, DENIED as to plaintiff Margie Daniel and GRANTED as to all remaining plaintiffs. Plaintiff shall file a renewed motion for class certification within thirty days of the date this Order is signed. Dated: May 17, 2016
/s/_________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE