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finding that defendant did not have exclusive knowledge of discrepancy between EPA estimate of car's gas mileage and real-world results when discrepancy was reported in Consumer Reports and USA Today
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Case No. CV 08-1690 PSG (JCx)
01-23-2012
Tracy Gray, et al. v. Toyota Motor Sales, U.S.A., et al.
#222
CIVIL MINUTES - GENERAL
Present: The Honorable Philip S. Gutierrez, United States District Judge Wendy K. Hernandez
Deputy Clerk Not Present
Court Reporter n/a
Tape No. Attorneys Present for Plaintiff(s): Not Present Attorneys Present for Defendant(s): Not Present
Proceedings: (In Chambers) Order GRANTING Defendants' Motion to Dismiss
Before the Court is the Toyota Defendants' motion to dismiss the Second Amended Class Action Complaint with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6). A hearing on the motion was held on January 23, 2012. After considering the moving and opposing papers and the arguments made at the hearing, the Court GRANTS the motion.
I. Background
The factual basis for the present action is well known to the Parties and the Court. See Dkt. # 97 (Apr. 3, 2009); Dkt. # 162 (June 23, 2009). On June 23, 2009, the Court issued an order denying Plaintiffs' motion for class certification, which Plaintiff then appealed. Two years later, the Ninth Circuit upheld the denial of class certification, but reversed the Court's determination that then-named Plaintiff Anthony Aberdeen lacked standing to pursue his "pure-omission" claims. Plaintiffs subsequently filed a Second Amended Class Action Complaint ("SAC") on October 25, 2011, see Dkt. # 211, removing Aberdeen as a named Plaintiff. The SAC asserts claims for violation of California's Unfair Competition Law ("UCL"), codified at California Business and Profession Code §§ 17200, et seq., California's Consumer Legal Remedies Act ("CLRA"), codified at Cal. Civil Code § 1750, et seq., and state-law fraudulent concealment. See SAC.
The claims are now brought on behalf of Plaintiffs Tracy Gray, a resident of Washington, and Jay Post, a resident of New York, who each purchased Toyota Prius Hybrids in their home states. See SAC ¶¶ 25-34. Plaintiffs state claims in their individual capacities and as representatives of a class composed of "all persons residing in the United States (excluding residents of California or any individual who purchased or leased a Prius in California)," who purchased or leased, not for resale, a 2004 through 2007 model year Prius during the class period. See SAC ¶ 66 (emphasis added). The Class period runs from March 12, 2004 through December 31, 2007. Id. The SAC also defines a CLRA Sub-Class composed of all Class members who are "consumers" within the meaning of Cal. Civil Code § 1761(a). Id.
Though the facts of the present dispute are familiar, Plaintiffs' theories of recovery have been tweaked. Plaintiffs continue to acknowledge that the fuel economy numbers advertised by Toyota for the Prius were calculated according to the method mandated by the EPA. See SAC ¶ 10. As before, Plaintiffs contend that Toyota knew the EPA fuel estimates were inaccurate and could not be achieved in a "real-world" setting. See id. ¶ 8. However, unlike prior iterations of their complaint, Plaintiffs have abandoned their affirmative misrepresentation theory and do not seek to recover under California's Fair Advertising Law (Cal. Bus. & Prof. Code §17500, et seq.). Instead, the SAC maintains that in light of Toyota's knowledge that the published EPA mileage estimates were inaccurate, Toyota's failure to disclose the results of its internal fuel efficiency tests amounts to an actionable omission. See id. ¶ 4. The SAC maintains that "[t]his case does not, in other words, concern allegations of Toyota's 'affirmative misrepresentations.'" Id. ¶ 2. Rather, Toyota's "representations regarding fuel economy are alleged in this Complaint only to demonstrate the manner by which Toyota confirmed and validated consumers' reasonable expectations that they would achieve 55 mpg under real world driving conditions." Id. ¶ 2, fn.1. Accordingly, the Court must determine whether any of Plaintiffs three causes of action are viable under a "pure omission" theory.
However, if, as Plaintiff maintains, Toyota knew the Prius could not achieve the EPA-estimated 55 MPG "while driving...in normal, real-world conditions," the Court fails to understand how Toyota's "confirmation" of this fact is anything other than an affirmative misrepresentation. See SAC ¶ 2, fn.1.
II. Legal Standard
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a cause of action if the plaintiff fails to state a claim upon which relief can be granted. In evaluating the sufficiency of a complaint under Rule 12(b)(6), the courts must be mindful that the Federal Rules of Civil Procedure require that the complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Nevertheless, the U.S. Supreme Court has instructed that "a complaint that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).
In resolving a Rule 12(b)(6) motion, the Court must first accept as true all non-conclusory, factual allegations made in the complaint. See Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164, 113 S. Ct. 1160, 122 L. Ed. 2d 517 (1993). Based upon these allegations, the Court must draw all reasonable inferences in favor of the plaintiff. See Mohamed v. Jeppesen Dataplan, Inc., 579 F.3d 943, 949 (9th Cir. 2009). After accepting as true all non-conclusory allegations and drawing all reasonable inferences in favor of the plaintiff, the Court must then determine whether the complaint alleges a plausible claim to relief. See Iqbal, 129 S. Ct. at 1950. In determining whether the alleged facts cross the threshold from the possible to the plausible, the Court is required "to draw on its judicial experience and common sense." Id. "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id.
III. Discussion
Because Plaintiffs proceed solely on a "pure-omission" theory of liability, the viability of each of the three causes of action alleged will turn on whether Toyota owed Plaintiffs a duty of disclosure. Aspects of this inquiry are common to all three claims. The Court will first outline the law governing Plaintiffs' UCL and CLRA claims, before turning to whether Plaintiffs' "pure omission" theory is actionable under the CLRA and the "fraudulent" and "unlawful" prongs of the UCL on the facts of this case. The Court will then address the viability of Plaintiffs' fraudulent concealment claim under any remaining theories of recovery.
A. UCL and CLRA Claims
1. Applicable Law
Plaintiffs' first cause of action is for unfair business practices in violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200. The UCL prohibits any "unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising[.]" Cal. Bus. & Prof. Code § 17200. A UCL claim can arise from representations "which may be accurate on some level, but will nonetheless tend to mislead or deceive." Paduano v. Am. Honda Motor Co., Inc., 169 Cal. App. 4th 1453, 1469 (2009) ("A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under the UCL.") (internal citations omitted). Because the statute is written in the disjunctive, it prohibits three separate types of unfair competition: (1) unlawful acts or practices, (2) unfair acts or practices, and (3) fraudulent acts or practices. Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 83 Cal. Rptr. 2d 548, 561 (1999). To succeed on a UCL claim under any of these theories, a plaintiff must establish that the defendant engaged in one of the practices prohibited by the statute and that, as a result of the defendant's actions, he or she suffered actual injury. Marolda v. Symantec Corp., 672 F. Supp. 2d 992, 1003 (N.D. Cal. 2009).
Second, Plaintiffs allege that Toyota violated the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750(a)(5) and 1750(a)(7). See SAC ¶¶ 90-102. The CLRA proscribes specified "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 to any consumer." Cal. Civ. Code § 1770(a). Such acts and practices include, inter alia, "[r]epresenting that goods or services have...characteristics, ingredients, uses, benefits, or qualities which they do not have," Cal. Civ. Code § 1770(a)(5), and "[r]epresenting that goods or services are of a particular standard, quality or grade...if they are of another." Cal. Civ. Code § 1770(a)(7).
Because the standard for deceptive practices under the "fraudulent" prong of the UCL applies equally to misrepresentation-based claims under the CLRA, see Consumer Advocates v. Echostar Satellite Corp., 113 Cal. App. 4th 1351, 1360, 8 Cal. Rptr. 3d 22 (2003), courts often address these claims in tandem. See Kowalsky v. Hewlett-Packard Co., No.: 10-CV-02176-LHK, 2011 WL 1466136, at *4 (N.D. Cal. Apr. 15, 2011); see also Paduano, 169 Cal. App. 4th at 1468-73 (analyzing UCL and CLRA claims together); Neu v. Terminix Intern., Inc., No. C 07-6472 CW, 2008 WL 2951390, at *3-4 (N.D. Cal. July 24, 2008) (analyzing UCL and CLRA claims together); Chacanaca v. Quaker Oats Co., No. C 10-0502 RS, 2010 WL 4055954, at *11-12 (N.D. Cal. Oct. 14, 2010) (same). Analyzing the statutes together is particularly appropriate where, as here, the "unlawful" theory of Plaintiffs' UCL claim is premised solely on the same CLRA violations. See SAC ¶ 78. After analyzing Plaintiffs' claims under the CLRA and the "fraudulent" and "unlawful" prongs of the UCL together, the Court will undertake a separate determination of whether Toyota's nondisclosures were "unfair" within the meaning of the UCL.
2. Liability under a "Pure Omission" theory
The California Court of Appeal has held that for an omission to be actionable under the UCL or the CLRA, it must be either (1) "contrary to a representation actually made by the defendant" or (2) a "fact the defendant was obligated to disclose." Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 835-36, 51 Cal. Rptr. 3d 118 (2006). This is because "a failure to disclose a fact one has no affirmative duty to disclose is [not] 'likely to deceive' anyone within the meaning of the UCL." See id. at 838. Courts have applied the first situation in cases where, as alleged here, Defendants "gave information of other facts which could have the likely effect of misleading the public for want of communication of" the alleged omissions. See Bardin v. Daimlerchrysler Corp., 136 Cal. App. 4th 1255, 39 Cal. Rptr. 3d 634 (2006).
As to the second situation, some district courts in California have imported the "duty" analysis applicable to common law fraudulent concealment actions in order to determine whether a defendant was "obligated to disclose" the information under the UCL and CLRA. See, e.g., Falk, 496 F. Supp. 2d at 1095. Applying this standard, a failure to disclose can constitute actionable fraud in four circumstances: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant has exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. Falk v. General Motors Corp., 496 F. Supp. 2d 1088, 1095 (N.D. Cal. 2007) (citing LiMandri v. Judkins, 52 Cal. App. 4th 326, 337, 60 Cal. Rptr. 2d 539 (1997)). Plaintiffs concede the first circumstance is not present, as they were not in a fiduciary relationship with Toyota, but argue they have stated claims based on circumstances two through four. The fourth LiMandri circumstance, applicable where a defendant makes partial representations that are rendered misleading by suppressed material facts, overlaps with the first situation identified in Daugherty and Bardin discussed supra.
However, the California Courts of Appeal are split on whether the LiMandri test is properly applied to UCL and CLRA claims based on omissions. Compare Collins v. eMachines, Inc., --- Cal. Rptr. 3d ----, 2011 WL 5910512, at *3 (2011) (citing Falk and applying the LiMandri factors); with Buller v. Sutter Health, 160 Cal. App. 4th 981, 988 fn.3, 74 Cal. Rptr. 3d 47 (2008) (noting the appellant's reliance on Falk "for the proposition that a failure to disclose is actionable under the UCL if it satisfies one of the four tests for the tort of fraud by failure to disclose as set forth in [LiMandri]," but concluding that as "Falk is a federal case and is not binding on California state courts....to the extent Falk compels the conclusion that respondents have a duty to disclose their discount policy [above and beyond the standard set forth in Daugherty and Bardin] we respectfully disagree").
Finally, and although the authority is again divided, the weight of authority suggests that a "manufacturer's duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue." See Oestreicher v. Alienware Corp., 322 Fed. Appx. 489, 493, 2009 WL 902341, at *3 (9th Cir. 2009) (citing Daugherty, 144 Cal. App. 4th at 824). In Oestreicher, Judge Patel held that the plaintiff could not maintain CRLA, UCL, and fraudulent concealment claims based on the defendant's failure to disclose a purported design defect in a notebook computer's heat management system because the defendant was under no affirmative duty to disclose this information. Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008). On appeal, the Ninth Circuit affirmed the court's dismissal of these claims, holding that the plaintiff's failure to allege that the defendant "affirmatively misrepresented its products" or that the alleged defect "posed a threat to his own safety or the safety of others" was fatal to his CLRA, UCL, and fraudulent concealment claims. Oestreicher, 322 Fed. Appx. at 493.
Similarly, in Smith v. Ford Motor Co., the plaintiffs brought a CRLA omission claim based on Ford's alleged failure to disclose the risk that ignition locks in certain vehicles could result in an inability to start the vehicle. 749 F. Supp. 2d 980, 987 (N.D. Cal. 2010). The court, relying on Daugherty, held that, absent evidence of a safety concern, the plaintiff could not succeed as a matter of law. Id. at 988; accord Morgan v. Harmonix Music Systems, Inc., 2009 WL 2031765, at *4 (N.D. Cal. 2009) (dismissing claims based on allegedly defective video game drum pedals) ("[a]ccording to all of the 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"); see also O'Shea v. Epson America, Inc., No. 09-8063 PSG (CWx), 2011 WL 3299936, at *8 (C.D. Cal., July 29, 2011) (citing various cases).
Therefore, to the extent many of the cases relied on by Plaintiffs involved omissions which posed a safety risk to consumers, such cases are distinguishable. See Falk, 496 F. Supp. 2d at 1096 (noting that "plaintiffs successfully allege[d] that the potential for failed speedometers constitutes a safety hazard" due to the "risk of inadvertent speeding, driving at unsafe speeds, and accidents"); Chamberlan v. Ford Motor Co., 369 F. Supp. 2d 1138, 1140-45 (N.D. Cal. 2005) (defect presented a "serious risk of engine failure" such that it was not "suitable for normal use as a passenger vehicle").
Plaintiffs rely heavily on a recent California Court of Appeal decision, Collins v. eMachines, Inc., --- Cal. Rptr. 3d ----, 2011 WL 5910512, at *1 (2011), for the proposition that "the California Court of Appeal [has] clarified that a defect need not involve safety to activate a manufacturer's duty of disclosure." See Opp. 8:14-9:3. Plaintiffs' reliance is misplaced. Collins involved a nondisclosure contrary to an express warranty that rendered the product defective within the warranty period. 2011 WL 5910512, at *1. According to the facts alleged, the manufacturer knew of the latent defect "[n]o later than October 31, 1999." 2011 WL 5910512, at *2. Nonetheless, the manufacturer did not disclose the defect and continued to sell the computers to the Class after this date and to expressly warrant that "each of the defective computers...were 'free from defects in materials and workmanship under normal use for a period of [one] year from the date of purchase.'" See id. at *2. Because a proposed SAC would have sufficiently alleged under Daugherty and Bardin that both named Plaintiffs "suffered data loss and missing files when using their floppy disk drive before the warranty expired," the trial court had abused its discretion in granting judgment on the pleadings without leave to amend. See id.
As the above discussion makes clear, Collins does nothing to alter the majority rule announced in Daugherty that absent an express warranty or a misrepresentation, a manufacturer's duty of disclosure is limited to safety-related defects. It is undisputed that the case before us involves neither a warranty nor a safety-related defect. Accordingly, it follows that if Plaintiff has stated a claim under the CLRA or the "fraudulent" or "unlawful" prongs of the UCL, such claim must be based on Toyota's actual representations. While the SAC contends that "[t]his case does not...concern allegations of Toyota's 'affirmative misrepresentations,'" and that to the extent Toyota's "representations regarding fuel economy are alleged in this Complaint" such allegations are intended only "to demonstrate the manner by which Toyota confirmed and validated consumers' reasonable expectations that they would achieve 55 mpg under real world driving conditions," the Court notes that Plaintiffs do raise the argument in Opposition that "it cannot be disputed that Toyota does have a duty under California law to disclose the truth about an aspect of its vehicle that is the focus of its marketing campaign." See Opp. 15:8-11. Accordingly, the Court again considers whether the statements alleged in the SAC are actionable.
Here, too, the claims must fail as they rely solely on advertisements that merely repeat the approved EPA mileage estimates, without any additional representations as to, for example, a consumer's ability to achieve those figures under normal driving conditions. See Paduano, 169 Cal. App. 4th at 1470. Under Paduano, such statements, without more, are non-actionable as a matter of law. See id. Plaintiffs contend that Paduano is distinguishable in that it involved an "affirmative representation" theory of recovery, and not the "partial representation" theory asserted here. But given Paduano's clear language that, "[a]s a matter of law, there is nothing false or misleading about Honda's advertising with regard to its statements that identify the EPA fuel economy estimates for the [] Hybrid models," this is a distinction without a difference. Paduano, 169 Cal. App. 4th at 1470 (emphasis added).
Plaintiffs' further attempt to distinguish Paduano on the grounds that Toyota performed internal testing and therefore had actual knowledge of the inaccuracy also fails because Paduano did allege that Honda knew the EPA mileage tests did "not reflect real driving situations, let alone [the] driving habits of consumers in the modern day," and that "one would have to drive the hybrid vehicle in a manner quite different from the manner in which one would drive a conventional vehicle" in order to approach those figures. See id. at 1471. Because here, as in Paduano, liability based solely on representations regarding the EPA mileage estimates would impermissible allow one to "directly challenge the accuracy of the EPA estimates by way of state law causes of action," Plaintiffs fail to state a cause of action based on these representations.
Nor is the applicability of Paduano to the present case precluded by the Ninth Circuit's recent ruling affirming denial of class certification. See Aberdeen v. Toyota Motor Sales, U.S.A., Inc., 422 Fed. Appx. 617, 619 (9th Cir. 2011). According to Plaintiff, the Ninth Circuit "specifically [found] that a rule that would allow a manufacturer to insulate itself from liability for failing to disclose information material to consumers is 'antithetical to the underlying purposes of the consumer protection legislation.'" See Opp. 1:15-19.
Plaintiffs misread that decision. In holding that a former named Plaintiff had standing to sue under a "pure omission" theory, the Ninth Circuit found erroneous the Court's conclusion that Plaintiff had not identified a viable source for consumers' expectations about the Prius's fuel economy. First, the Ninth Circuit disagreed that in the absence of exposure to Toyota's advertisements, "a reasonable consumer would not assume that an automobile would achieve 55 mpg," see Dkt. # 97, p. 7 (Apr. 3, 2009) (the "April Order"), because this information was available, for example, on the EPA's website. See Aberdeen, 422 Fed. Appx. at 619. Second, the Ninth Circuit disapproved of the Court's reasoning to the extent that it "would permit a manufacturer to make certain representations and then be insulated from liability for failing to disclose contrary information so long as the consumer had no alternate source of data on the subject." See id. (emphasis added). In so noting, the Ninth Circuit clarified that the Court's opinion was not to be read in such a way as would release a manufacturer from liability for otherwise actionable representations simply because the representations were made in its own advertisements and nowhere else. Rightly, such a situation would be "antithetical to the underlying purposes of consumer protection legislation," but it is not at issue here.
The Ninth Circuit did not hold, as Plaintiffs suggest, that Paduano is inapposite to the Court's determination of whether an actionable representation exists in this case. See Opp. 1:13-15. Paduano and the Court's interpretation of it were not mentioned. Nor did the Ninth Circuit give any indication that "Toyota[ is] obligated[ed] to disclose all material information that it possesses (and to which consumers have no independent access)...," as Plaintiffs would have it. See Opp. 2:13-15. To the contrary, the Ninth Circuit not only declined to opine on whether a duty of disclosure existed on these facts, it expressly reserved judgment on that question and directed it to the Court's attention, noting that:
In finding fault with the district court's earlier analysis, we do not mean to suggest whether Aberdeen has stated a claim on which relief may be granted. The district court should decide whether California law supports a "pure omission" theory of liability in the non-warranty context, and whether California law creates a duty to disclose Toyota's internal fuel economy data.Id. (citing Falk v. Gen. Motors Corp., 496 F. Supp. 2d 1088 (N.D. Cal. 2007), and comparing it to Buller v. Sutter Health, 160 Cal. App. 4th 981, 74 Cal. Rptr. 3d 47, 51-52 (2008) (rejecting contention that Falk applies to non-safety related omissions), and Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 51 Cal. Rptr. 3d 118, 127 (2006) (same)).
Because the Ninth Circuit did not limit Paduano or its applicability to the facts of this case, and because federal district courts must follow the decisions of the California Courts of Appeal in the absence of contrary Ninth Circuit authority or "convincing evidence that the California Supreme Court would hold otherwise," see Alvarez v. Chevron Corp., 656 F.3d 925, 932 n.7 (9th Cir. 2011), Paduano precludes Plaintiffs' CLRA and UCL claims to the extent they are premised solely on representations regarding the Prius's EPA mileage estimates.
For the foregoing reasons, the Court holds that Toyota was not legally obligated to disclose that the actual fuel economy of the 2004 through 2007 Prius did not meet the EPA estimates. Because Toyota was not obligated to disclose the purportedly omitted information, Plaintiffs' omission-based claims under CLRA and the "fraudulent" prong of the UCL fail as a matter of law. And because Plaintiffs' "unlawful" UCL claim was premised solely on Toyota's purported violation of the CLRA, it, too, is dismissed.
Plaintiffs have also failed to sufficiently allege or otherwise demonstrate that Toyota's marketing of the EPA estimates was "unfair" within the meaning of the UCL. The SAC contains only conclusory allegations that "had Plaintiffs known the concealed material facts, they would have either bought a different car or paid less," and that "Defendants committed one or more acts of unfair competition within the meaning of" the UCL. See SAC ¶¶ 73-89; Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949, (2009) ("a complaint that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'"). Plaintiffs' support for this claim is limited to a single footnote in a twenty-four page Opposition. Meritorious legal arguments purportedly important enough to warrant the Court's attention should not be relegated to footnote. See Network Appliance Inc. v. Sun Microsystems Inc., No. C-07-06053 EDL, 2008 WL 4712604, at *1 (N.D. Cal., Oct. 22, 2008). For these reasons, the Court also finds Plaintiffs have failed to adequately plead a cause of action under the "unfairness" prong of the UCL.
B. Fraudulent Concealment
The elements of common law fraud in California are: (1) a misrepresentation of a material fact (false representation, concealment, or nondisclosure); (2) knowledge of falsity; (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damages. See Collins, 2011 WL 5910512, at *6. As noted above in connection with Plaintiffs' CLRA and UCL claims, to establish fraud through nondisclosure or concealment of facts, it is necessary to show that the defendant "was under a legal duty to disclose them." Buckland v. Threshold Enters. Ltd., 155 Cal. App. 4th 798, 807, 66 Cal. Rptr. 3d 543, 548 (2007). Accordingly, for the same reasons that Plaintiffs' partial-representation and omission-based claims failed under the CLRA and the UCL, dismissal is also appropriate on Plaintiffs' common-law fraud claim. See Oestreicher, 322 Fed. Appx. at 493 ("Oestreicher does not allege that Alienware affirmatively misrepresented its products, nor does he claim that the alleged defect posed a threat to his own safety or the safety of others. The district court thus properly dismissed the CLRA and fraudulent concealment claims, as well as the Unfair Competition Law ("UCL") claims that derive from them."); O'Shea, 2011 WL 3299936, at *11.
In any event, were the Court to assume that an action for fraudulent concealment may lie in the absence of a safety defect, see Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 974 (N.D. Cal. 2008), Plaintiffs still fail to state a claim under the two remaining LiMandri circumstances, which create a duty of disclosure where the defendant has exclusive knowledge of material facts not known to the plaintiff, or where the defendant actively conceals a material fact from the plaintiff. See LiMandri, 52 Cal. App. 4th at 337).
As noted above, Plaintiffs do not proceed under the first LiMandri circumstance and the Court has already addressed the fourth in connection with the UCL and CLRA claims.
First, Plaintiffs have not pleaded any facts indicating that Toyota had "exclusive knowledge" that the Prius's real-world fuel efficiency did not equal its EPA mileage estimates, and Plaintiffs' own allegations belie any such assertion. See Grisham v. Philip Morris, Inc., 670 F. Supp. 2d 1014, 1044 (C.D. Cal. 2009). Rather, the SAC demonstrates that as early as May 2004 Consumer Reports publically revealed that "the discrepancy [between the EPA estimates and real-world figures] for Hybrids is much, much bigger" than for other vehicles. See SAC ¶ 47. Moreover, a real-world driving test conducted that same month by a USA Today reporter found that on a long-distance trip from Ann Arbor, Michigan to Washington, D.C., the Prius averaged just 38 MPG. Id. ¶ 49. Given the newsworthiness and the mainstream-media attention to the topic, both the inaccuracy of the EPA mileage estimates for hybrids and the fact that the Prius had underperformed in real-world mileage tests was public information. As Plaintiffs purchased their Prius Hybrids more than two years after this information was disseminated, Plaintiffs cannot show that Toyota possessed "exclusive" knowledge of these facts at the time of purchase.
Plaintiffs cite Falk to argue that the above does not negate Toyota's "exclusive" knowledge. In Falk, the court found Plaintiffs had successfully pleaded GM's "exclusive" knowledge of the fact that its speedometers failed after 45,000 miles, notwithstanding that complaints about the failed speedometers were on the internet and some prospective purchasers "may have" seen them. See 496 F. Supp. 2d at 1096-97. Falk reached this conclusion on the grounds that GM was "alleged to have known a lot more about the defective speedometers, including information unavailable to the public," and many customers might not have, and were not required to, perform an Internet search on the topic before choosing a new car. See id.
The Court finds Falk distinguishable. Here, we are not faced with a speedometer that functions as anticipated for 45,000-plus miles, before breaking unexpectedly after a consumer has exceeded their warranty coverage. See id. at 1097. The Prius's real-world MPG can be readily and immediately observed by a layman. Arguably, as soon as the first Prius was driven off the lot, Toyota's knowledge of its real world fuel performance ceased to be "exclusive." While the law may not proscribe such a literal test for exclusivity, the Court nonetheless finds absurd the idea that Toyota could have retained exclusive, or even superior knowledge of the Prius's real-world fuel performance over a three-year Class period in which hundreds of thousands of the vehicles were driven daily under the conditions at issue.
The Court also finds that Plaintiffs have failed to adequately plead particularized facts demonstrating that Toyota took steps to "actively conceal" the Prius's real-world fuel efficiency. The SAC alleges only that Plaintiffs "are aware of nothing in Toyota's advertising, publicity, marketing materials or other representations that discloses the real truth about the fuel efficiency of the TPH, despite ample evidence that Toyota was aware of the problem." See SAC ¶ 96b. But if mere nondisclosure constituted "active concealment," the duty requirement would be subsumed and any material omission would be actionable. This is not the law.
In Opposition, Plaintiffs contend that Toyota's instruction to customers to try adjusting their driving habits or increasing their tire pressure amounts to active concealment of the results of Toyota's internal fuel efficiency testing. However, the California Court of Appeal has considered similar actions by manufacturers and concluded that they did not amount to active concealment where they only tangentially related to the undisclosed information. See Daugherty, 144 Cal. App. 4th at 828 (finding that issuance of a partial "product update campaign" offering to replace a defective part on some vehicles manufactured by defendants, but which did not state that the part was defective and did not include Plaintiffs' vehicles which also contained the same defective part did not work an affirmative concealment of the fact that Plaintiffs' vehicles were also defective).
At best, these allegations suggest only that when customers expressed dissatisfaction with their mileage, Toyota's customer service representatives suggested ways in which it could be improved. Plaintiffs do not allege that Toyota sought to suppress information in the public domain or obscure consumers' ability to gauge their own mileage. Given the early reports regarding the Prius's fuel efficiency, the obviousness of the MPG calculation, and the large sample size of Prius Hybrids being driven under real-world conditions, absent any further representation by Toyota that the EPA estimates could be achieved easily under real world conditions, the Court finds that Toyota's statements do not amount to active concealment. See Paduano, 169 Cal. App. 4th at 1469-73. Finally, the Court also notes that the complaint is wholly devoid of any allegation that defendants actively concealed the information "from Plaintiff." See Grisham, 670 F. Supp. 2d at 1044 (emphasis in original).
For the foregoing reasons, Plaintiffs' claim for fraudulent concealment is also dismissed.
IV. Conclusion
In conclusion, the Court finds that Plaintiffs have failed to state viable claims for common-law fraudulent concealment and for violation of the CLRA and UCL pursuant to either a partial representation or a "pure omission" theory. See Oestreicher, 322 Fed. Appx. at 493. Because none of Plaintiffs' claims survive Toyota's motion to dismiss, the Court need not engage in a choice of law analysis to determine whether California law is appropriately applied to a Class defined to exclude California residents or anyone who purchased or leased a Prius in California. See Mazza v. American Honda Motor Company, --- F.3d ----, No. 09-55676, 2012 WL 89176, at *1 (9th Cir. 2012). This case has been pending for almost four years and has featured two motions to dismiss, a motion for class certification, an appeal to the Ninth Circuit, and three iterations of the complaint. As Plaintiffs have failed to convince the court that amendment at this late stage would be efficacious, dismissal is with prejudice.
IT IS SO ORDERED.