Opinion
Case No.: SACV 21-00762-CJC(DFMx)
2021-07-20
Donald HALL, individually and on behalf of all others similarly situated, Plaintiffs, v. FIAT CHRYSLER AMERICA ("FCA") US LLC, and Does 1–250, Defendants.
Steven Joseph Wysocky, Michael John Trotter, Caroll Kelly Trotter Franzen McBride and Peabody, Long Beach, CA, for Plaintiff Donald Hall. Scott H. Morgan, Pro Hac Vice, Stephen A. D'Aunoy, Pro Hac Vice, Thompson Coburn LLP, St. Louis, MO, Ryan E. Cosgrove, Nelson Mullins Riley and Scarborough LLP, Torrance, CA, for Defendants.
Steven Joseph Wysocky, Michael John Trotter, Caroll Kelly Trotter Franzen McBride and Peabody, Long Beach, CA, for Plaintiff Donald Hall.
Scott H. Morgan, Pro Hac Vice, Stephen A. D'Aunoy, Pro Hac Vice, Thompson Coburn LLP, St. Louis, MO, Ryan E. Cosgrove, Nelson Mullins Riley and Scarborough LLP, Torrance, CA, for Defendants.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT [Dkt. 19]
CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
Plaintiff Donald Hall brings this putative class action against Defendant Fiat Chrysler America ("FCA") US LLC, alleging that Defendant violated its express warranty and service contract. (Dkt. 1 [Complaint, hereinafter "Compl."].) Now before the Court is Defendant's motion to dismiss Plaintiff's complaint. (Dkt. 19.) For the following reasons, Defendant's motion is GRANTED .
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78 ; Local Rule 7-15. Accordingly, the hearing set for August 2, 2021, at 1:30 p.m. is hereby vacated and off calendar.
II. BACKGROUND
Plaintiff purchased a 2008 Jeep Liberty from Chrysler LLC who was later acquired by Defendant in 2009. (Compl. ¶¶ 6, 15.) Plaintiff's Jeep came with a lifetime limited powertrain warranty (the "Powertrain Warranty") and Plaintiff separately purchased a lifetime service contract (the "Service Contract"). (Id. ¶ 15.)
The Powertrain Warranty states that to maintain its coverage, the person covered "must have a powertrain inspection performed by an authorized ... dealer once every 5 years ... within sixty (60) days of each 5 year anniversary." (Dkt. 20-1 Ex. A [hereinafter "Powertrain Warranty"] at 12.) Plaintiff concedes that he did not comply with this inspection requirement. (Compl. ¶ 16; Dkt. 26 [Opposition] at 1.) The Service Contract provides that "eligible vehicles" include only those "covered by a minimum of BOTH a 3/36 Basic Warranty AND Lifetime Powertrain Warranty." (Dkt. 20-2 Ex. B [hereinafter "Service Contract"] at 2.) The Service Contract also states that Defendant may "cancel the [Service Contract] after issuance" if "the vehicle is ineligible." (Id. at 5.)
While the Court ordinarily cannot consider documents outside the pleadings when considering a motion to dismiss, it may consider "documents attached to the complaint" or "incorporated by reference in the complaint." United States v. Ritchie , 342 F.3d 903, 907 (9th Cir. 2003). Here, Plaintiff's complaint incorporates by reference both the Service Contract and the Powertrain Warranty.
In July 2020, Plaintiff brought his Jeep to one of Defendant's dealerships to repair his air conditioner. (Compl. ¶ 16.) The dealership informed Plaintiff that the repair would have been covered by the Service Contract, but his vehicle was no longer eligible for coverage because it had not been inspected by an authorized dealer once every 5 years as required by the Powertrain Warranty. (Id. ) Then, in October 2020, Plaintiff needed a transmission repair, which ordinarily would have been covered under the Powertrain Warranty. (Id. ¶ 19.) Again, however, Plaintiff was denied coverage because his vehicle had not been inspected once every 5 years. (Id. ) These two repairs cost Plaintiff nearly $3,000. (Id. ¶¶ 16, 19.)
Plaintiff asserts claims for (1) breach of the Service Contract, (2) breach of the Powertrain Warranty, (3) violation of the Racketeer Influenced and Corrupt Practices Act ("RICO"), and (4) violation of California's Unfair Competition Law ("UCL").
III. LEGAL STANDARD
A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a plaintiff's claims. The issue on a motion to dismiss for failure to state a claim is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco Dev. Corp. , 108 F.3d 246, 249 (9th Cir. 1997). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). To survive a motion to dismiss, a complaint must contain sufficient factual allegations to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Skilstaf, Inc. v. CVS Caremark Corp. , 669 F.3d 1005, 1014 (9th Cir. 2012). However, the Court is "not bound to accept as true a legal conclusion couched as a factual allegation." Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
IV. DISCUSSION
Defendant moves to dismiss Plaintiff's complaint. The Court considers each of Plaintiff's claims in turn and concludes that dismissal of the complaint is warranted.
A. Breach of Contract & Breach of Express Warranty
Plaintiff alleges claims for breach of contract based on the terms of the Service Contract and breach of express warranty based on the terms of the Powertrain Warranty. Both claims fail, however, because Plaintiff has failed to allege that Defendant breached its obligations under either document. See Hartley , 224 Cal. App. 4th 1182, 1186, 169 Cal.Rptr.3d 475 (2014) (requiring breach as an element of any breach of contract claim); Weinstat v. Dentsply Int'l, Inc. , 180 Cal. App. 4th 1213, 1227, 103 Cal.Rptr.3d 614 (2010) (requiring breach as an element of any breach of warranty claim).
In Plaintiff's breach of warranty claim, he alleges that Defendant breached the Powertrain Warranty by refusing to cover the cost of repairing his transmission. But the Powertrain Warranty very clearly states that it will no longer cover a vehicle that does not receive "a powertrain inspection performed by an authorized ... dealer once every 5 years ... within sixty (60) days of each 5 year anniversary." (Powertrain Warranty at 12.) Consequently, because Plaintiff failed to service his vehicle within 60 days of its 5-year anniversary, Defendant was no longer required to cover the vehicle under its Powertrain Warranty.
Plaintiff nevertheless argues that this inspection requirement is "a subterfuge" because the Powertrain Warranty also instructs the customer to "[f]ollow the instructions contained in the ... Owner's Manual," and the Owner's Manual does not reference the inspection requirement. (Opposition at 5; Powertrain Warranty at 46.) But instructing a customer to consult the Owner's Manual to understand how to "properly maintain and operate [their] vehicle" does not negate the Powertrain Warranty's specific provision that it only covers vehicles that have been inspected once every 5 years. Furthermore, even when "there is an inconsistency between general provisions and specific provisions, the specific provisions ordinarily qualify the meaning of the general provisions." Smith v. Simmons , 638 F. Supp. 2d 1180, 1193 (E.D. Cal. 2009). Here, the inspection requirement is contained in the section titled "Lifetime Powertrain Limited Warranty"—the section specifically governing the Powertrain Warranty—while the instruction to follow the Owner's Manual comes over 30 pages later in a section titled "General Information." (Powertrain Warranty at 12, 46.) Similarly, in Plaintiff's breach of contract claim, he alleges that Defendant breached the Service Contract by refusing to cover the cost of repairing his air conditioner. Again, however, the Service Contract provides that "eligible vehicles" include only those "covered by a minimum of BOTH a 3/36 Basic Warranty AND Lifetime Powertrain Warranty." (Service Contract at 2.) The Service Contract also states that Defendant may "cancel the [Service Contract] after issuance" if "the vehicle is ineligible." (Id. at 5.) Because Plaintiff's vehicle was no longer covered by the Powertrain Warranty, it was not an "eligible vehicle" under the Service Contract and Defendant was permitted to cancel its coverage.
Plaintiff also argues that the inspection requirement is inconspicuous, but this assertion is unsupported. The inspection requirement comes directly after the bolded heading, "Inspection," which is one of only 8 headings contained in the section titled "Lifetime Powertrain Limited Warranty." (Powertrain Warranty at 12, 46.)
B. RICO
"To prevail on a civil RICO claim, Plaintiff must prove that Defendants engaged in (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity and (5) Defendants caused injury to plaintiff's business or property." Spotlight Ticket Mgmt., Inc. v. StubHub, Inc. , 2020 WL 4342260, at *2 (C.D. Cal. May 22, 2020) (citing Chaset v. Fleer/Skybox Int'l, LP , 300 F.3d 1083, 1086 (9th Cir. 2002) ). Courts "strive to flush out frivolous RICO allegations at an early stage of the litigation." Wagh v. Metris Direct, Inc. , 348 F.3d 1102, 1108 (9th Cir. 2003).
Plaintiff has failed to allege facts establishing "an enterprise." Plaintiff alleges that the RICO enterprise is comprised of Defendant and thousands of auto dealerships across the United States, but "[c]ourts have overwhelmingly rejected attempts to characterize routine commercial relationships—in which the parties transact to provide services—as RICO enterprises." Spotlight Ticket Mgmt., Inc. v. StubHub, Inc. , 2020 WL 4342260, at *3 (C.D. Cal. May 22, 2020). Because the automobile manufacturers and dealerships at issue are accused of merely maintaining "routine commercial relationships," they cannot be classified as a RICO enterprise. Plaintiff's RICO claim fails accordingly. See id.
C. UCL
The UCL prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof. Code § 17200. "Because the statute is written in the disjunctive, it is violated where a defendant's act or practice is (1) unlawful, (2) unfair, (3) fraudulent, or (4) in violation of section 17500 (false or misleading advertisements)." Lozano v. AT & T Wireless Servs., Inc. , 504 F.3d 718, 731 (9th Cir. 2007). Plaintiff alleges that Defendant has violated the UCL's unlawful and unfair prongs, but his allegations are insufficient to state a plausible claim for relief.
The UCL's "unlawful" prong prohibits "anything that can properly be called a business practice and that at the same time is forbidden by law." Clevenger v. Riviana Foods Inc. , 2019 WL 8167916, at *4 (C.D. Cal. Oct. 22, 2019) (quoting Cel-Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co. , 20 Cal. 4th 163, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999) ). "By proscribing ‘any unlawful’ business practice, the UCL permits injured consumers to ‘borrow’ violations of other laws and treat them as unfair competition that is independently actionable." Id. (quoting Cel-Tech , 20 Cal. 4th at 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 ); Durell v. Sharp Healthcare , 183 Cal. App. 4th 1350, 1361, 108 Cal.Rptr.3d 682 (2010) ("Virtually any law—federal, state or local—can serve as a predicate action under [the UCL]."). Here, Plaintiff has not sufficiently alleged that Defendant violated any other law.
To determine whether conduct is "unfair" under the UCL, California courts have articulated two main tests. One line of authority defines "unfair" as "prohibiting conduct that is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers and requires the court to weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim." Bardin v. DaimlerChrysler Corp. , 136 Cal. App. 4th 1255, 1260, 39 Cal.Rptr.3d 634 (2006). The other line of authority requires that the business practice violate a "public policy which is ... tethered to specific constitutional, statutory, or regulatory provisions." Id. Here, Plaintiff does not allege any prohibitory conduct or specific constitutional, statutory, or regulatory provision as is required to state a claim under the UCL for "unfair" business practices. Allegations that Defendant acted in accordance with the express language of its contracts and warranties are insufficient.
V. CONCLUSION
For the foregoing reasons, Defendant's motion to dismiss Plaintiff's complaint is GRANTED. "Although the Court recognizes that this Circuit has a liberal policy favoring amendments and that leave to amend should be freely granted, the Court is not required to grant leave to amend if the Court determines that permitting Plaintiff to amend would be an exercise in futility." El Dorado Cmty. Serv. Ctr. v. Cnty. of Los Angeles , 2017 WL 6017297, at *3 (C.D. Cal. Jan. 3, 2017). Plaintiff has failed to provide the Court with any facts or argument indicating that Defendant breached its obligations in any way. See id. Accordingly, the Court concludes that leave to amend would be futile and DENIES Plaintiff leave to amend. Plaintiff's Complaint is DISMISSED WITH PREJUDICE.