Crystal Springs Upland Sch. v. Fieldturf USA, Inc., Case No.16–cv–01335–HSG

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Writing for the Court: HAYWOOD S. GILLIAM, JR., United States District Judge
• Citation: 219 F.Supp.3d 962
• Parties: CRYSTAL SPRINGS UPLAND SCHOOL, Plaintiff, v. FIELDTURF USA, INC., et al., Defendants.
• Docket Number: Case No.16–cv–01335–HSG
• Decision Date: 07 November 2016

219 F.Supp.3d 962

CRYSTAL SPRINGS UPLAND SCHOOL, Plaintiff,
v.
FIELDTURF USA, INC., et al., Defendants.

Case No.16–cv–01335–HSG

United States District Court, N.D. California.

Signed November 7, 2016

219 F.Supp.3d 963

Irina Mazor, Peter Frederick Lindborg, Glendale, CA, for Plaintiff.

Kristian Bernard Moriarty, R. Bryan Martin, Haight Brown and Bonesteel LLP, Irvine, CA, William Oscar Martin, Haight, Brown & Bonesteel LLP, Los Angeles, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' PARTIAL MOTION TO DISMISS; SETTING INITIAL CASE MANAGEMENT CONFERENCE

Re: Dkt. No. 11

HAYWOOD S. GILLIAM, JR., United States District Judge

Before the Court is the partial motion to dismiss filed by Defendants Fieldturf

219 F.Supp.3d 964

USA, Inc., ("FUSA"), Fieldturf, Inc., and Fieldturf Tarkett SAS (together, "Defendants"). Dkt. No. 11 ("Mot."). Defendants move to dismiss Plaintiff Crystal Springs Uplands School's ("Plaintiff") negligent misrepresentation and breach of warranty claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiff has filed an opposition, Dkt. No. 12 ("Opp."), and Defendants have replied, Dkt. No. 13 ("Reply").

Under Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7–6, the Court finds that this matter is suitable for disposition without oral argument. For the reasons set forth below, the Court hereby GRANTS IN PART and DENIES IN PART Defendants' partial motion to dismiss. Plaintiff's negligent misrepresentation claim is DISMISSED WITHOUT PREJUDICE because, as pled, it is barred by the economic loss rule. But Plaintiff is GRANTED LEAVE TO AMEND that claim within 30 days of the date of this Order.

I. BACKGROUND

A. Factual Allegations

This is a dispute about an allegedly defective turf field. Plaintiff is a private middle school and high school located in Hillsborough, California. Dkt. No. 1 ("Compl.") ¶ 3. In 2008, Plaintiff began investigating the possibility of installing a synthetic turf soccer field at the school's campus. Id. ¶ 9. As part of that investigation, Plaintiff studied the various artificial turf products available on the market and the suppliers of those products, one of which was Defendants. Id. ¶ 10.

Defendants' marketing materials represented that its turf field products were made from a patented monofilament fiber, sold under the trade name Fieldturf Duraspine, which was available only to Defendants. Id. ¶ 11. Defendants further represented that: (1) purchasers would be able to "amortize the life of [the] field on a 10+ year basis"; (2) "although FieldTurf sometimes cost [sic] more to install, it is actually cheaper over the long term. Sometimes almost $1,000,000 cheaper!"; (3) the fields have a "Turf Life [of] 8–10 years"; (4) Duraspine "provides the industry's strongest wear resistance and superior pile recovery. It's the most durable fiber[.]"; (5) "FieldTurf has proven to be the most durable system in the world"; (6) "All of FieldTurf's components are made from the highest quality materials"; (7) Duraspine is "renowned for its durability and resistance to matting"; (8) "FieldTurf has proven to be the most durable and longest-lasting synthetic turf system in the marketplace"; (9) "FieldTurf may be priced slightly higher but it costs significantly less"; and (10) FieldTurf installs "10 pounds of infill per square foot [of field] (7 pounds of silica sand plus 3 pounds of cryogenic rubber) [which is] vital to safety, durability and longevity." Id. Defendants also offered Plaintiff a third-party insured, eight-year manufacturer's warranty on a turf field because Defendants had "inspect[ed] all aspects of the product from fiber to finishing." Id. ¶ 12.

In reliance on these representations, Plaintiff contracted with FUSA in or around July 2009 to have FUSA furnish and install a two-inch thick artificial grass in-filled playing surface for use as a soccer field at Plaintiff's campus in exchange for a total payment from Plaintiff of $281,760. Id. ¶ 13. Plaintiff's payment later increased to $293,760 through the issuance of a change order. Id. The turf field was to be made of the Fieldturf Duraspine monofilament fibers that Defendants had described in their marketing materials. Id. ¶ 14. FUSA finished installing the turf field in or around September 2009 and, at that

219 F.Supp.3d 965

time, provided Plaintiff with an eight-year warranty for repair or replacement of all, or any portion, of the field "defective in material or workmanship, resulting in premature wear." Id. ¶ 15.

On March 1, 2011, Defendants filed a federal lawsuit against third-party TenCate, the exclusive supplier of the monofilament fiber used by Defendants in their turf products. Id. ¶ 17. Defendants alleged that TenCate had changed the formula and the process by which it made the fiber, manufacturing it without an "adequate amount of ultraviolet stabilizers required to prevent loss of tensile strength," thereby rendering it "less durable" and "increasing the likelihood of premature fiber degradation under certain conditions." Id. Defendants also alleged that during 2009, at the same time or before Plaintiff contracted with FUSA, they had received a significant number of customer complaints, reporting "excessive thinning and fading of the fibers—especially along white and yellow lines, logos and other field areas composed of colored yarn" and that "large areas of the turf had degraded dramatically." Id. ¶ 18a. In other instances, customers had complained that the "fiber in one tufted row of a field was failing, while fiber of the same color in an immediately adjacent tufted row was not failing." Id. ¶ 18b. Defendants asserted that "[t]he existence of variable degradation rates in fiber exposed to the same environmental and wear conditions suggested ... that TenCate had quality control issues[.]" Id. But Plaintiff alleges that Defendants were actually receiving complaints about their Duraspine fields failing before then and had commenced their own investigation as early as 2006. Id. ¶ 19. The lawsuit against TenCate went to trial and Defendants' chief executive officer testified that, at the same time they installed Plaintiff's turf field, they considered the Duraspine fiber to be defective, but were installing new fields anyway without telling their customers. Id. ¶ 20 & Ex. A (CEO trial testimony excerpts).

On this basis, Plaintiff alleges that the representations and warranties that Defendants made in their marketing materials and the warranty were knowingly false, or at least reckless. Id. ¶ 16. Furthermore, Defendants never disclosed to Plaintiff that its products were defective. Id. ¶ 21. In early 2015, Plaintiff noticed that its turf field was failing despite the fact that the field got substantially less use than many of Defendants' other artificial turf fields. Id. ¶ 23. When Plaintiff complained to Defendants, they attempted to perform routine maintenance work on the field and refused to replace it. Id. ¶ 24. The field has continued to deteriorate. Id. ¶ 25.

B. Procedural History

Plaintiff filed this action on March 18, 2016, asserting claims for breach of warranty, fraud, negligent misrepresentation, and unfair competition. Id. ¶¶ 27–55. Plaintiff seeks damages, pre-judgment interest, punitive and exemplary damages, restitution, and attorneys' fees and costs. Id. Plaintiffs also seek a permanent injunction requiring that Defendants respond to any warranty claim made on any field installed before July 1, 2011, with a full replacement of that field at no cost to the customer, but Plaintiff does not assert any class claims. See id.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a) requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). "Dismissal

219 F.Supp.3d 966

under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead "enough facts 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). A claim is facially plausible when a plaintiff pleads "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

In reviewing the plausibility of a complaint, courts "accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, Courts do not "accept as true allegations that are...