In re Nexus 6P Prods. Liab. Litig., Case No. 17–cv–02185–BLF

• Decision Date: 05 March 2018
• Docket Number: Case No. 17–cv–02185–BLF
• Citation: 293 F.Supp.3d 888
• Court: U.S. District Court — Northern District of California
• Parties: IN RE NEXUS 6P PRODUCTS LIABILITY LITIGATION

293 F.Supp.3d 888

IN RE NEXUS 6P PRODUCTS LIABILITY LITIGATION

Case No. 17–cv–02185–BLF

United States District Court, N.D. California, San Jose Division.

March 5, 2018

ORDER GRANTING WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART AND DENYING IN PART HUAWEI'S MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT AND TO STRIKE CLASS ALLEGATIONS; GRANTING WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART AND DENYING IN PART GOOGLE'S MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT

[Re: ECF 38, 39]

BETH LABSON FREEMAN, United States District Judge

In this putative consumer class action, Plaintiffs Roy Berry, Jonathan Makcharoenwoodhi, Alex Gorbatchev, Brian Christensen, Anthony Martorello, Khanh Tran, Edward Beheler, Yuriy Davydov, Rebecca Harrison, Zachary Himes, Taylor Jones, Paul Servodio, Justin Leone, James Poore, Jr., and Kenneth Johnston (collectively, "Plaintiffs") allege severe defects in their Nexus 6P smartphones. Plaintiffs sued the companies that developed the phone—Huawei Device USA, Inc. ("Huawei") and Google LLC ("Google")—for breach of warranty, fraud, and unjust enrichment. Their twenty-three causes of action span a litany of state laws and one federal statute.

Presently before the Court are Huawei's Motion to Dismiss the Consolidated Amended Complaint and to Strike Class Allegations ("Huawei's Motion to Dismiss"), Huawei Mot., ECF 38; and Google's Motion to Dismiss Consolidated Amended Complaint ("Google's Motion to Dismiss"), Google Mot., ECF 39. In a previous order, the Court granted with leave to amend Huawei's Motion to Dismiss on the ground that the Court lacks personal jurisdiction over Huawei. ECF 113. Here, the Court dives into the merits of Huawei's and Google's Motions to Dismiss, which assert that Plaintiffs have failed to state a claim on which relief can be granted and that Plaintiffs' class allegations should be stricken.

The Court held a hearing on these motions on January 18, 2018. The Court has considered the arguments presented at oral argument and in the briefing, as well as the submitted evidence and applicable law. For the reasons that follow, the Court hereby GRANTS WITH LEAVE TO AMEND IN PART, GRANTS WITHOUT LEAVE TO AMEND IN PART, AND DENIES IN PART Huawei's and Google's Motions to Dismiss. The Court DENIES Huawei's and Google's motions to strike Plaintiffs' class allegations.

I. BACKGROUND

The following facts are drawn from the Consolidated Amended Complaint ("CAC"), ECF 28. In September 2015, Google unveiled the Nexus 6P, the newest version of its Nexus 6 smartphone. CAC ¶ 165. Google and Huawei created the Nexus 6P together, with Google handling software development and Huawei handling device manufacture. Id. At the launch event and in advertising, Google touted many of the superior features of the phone. See id. ¶¶ 7, 169, 171.

Unfortunately, according to the CAC, the Nexus 6P suffers from two defects. First, some phones unexpectedly turn off and, upon turning back on, experience an endless bootloop cycle (the "Bootloop Defect"). Id. ¶ 174. When the Bootloop Defect manifests, the phone becomes nonoperational and all unsaved data is lost because the phone cannot proceed beyond the start-up screen. Id. ¶ 175. Second, some phones prematurely shut off despite showing a battery charge of anywhere from 15–90% (the "Battery Drain Defect"). Id. ¶ 177. When the Battery Drain Defect manifests, the phone remains dead until the user reconnects it to power. Id. ¶ 178. After some charging, the battery shows the same or similar charge as indicated before the premature shut-off. Id. ; see also id. ¶ 61. Complaints about the Bootloop and Battery Drain Defects began cropping up online as early as September and October 2016. Id. ¶¶ 175, 184, 187–88.

This putative class action was commenced on April 19, 2017. ECF 1. Plaintiffs filed the operative complaint—the CAC—on May 23, 2017. Plaintiffs seek to represent a nationwide class of customers who purchased or own a Nexus 6P. CAC ¶¶ 1, 205. They also propose twelve statewide subclasses, which cover all persons or entities in the states of California, Florida, Illinois, Indiana, Michigan, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Texas, and Washington who purchased or own at least one Nexus 6P. Id. ¶ 205.

Plaintiffs bring twenty-three causes of action against both Huawei and Google under a spattering of state laws and one federal law. At the high level, their claims fall into three buckets: (1) warranty claims, (2) fraud claims, and (3) unjust enrichment claims. Their warranty claims consist of claims for (1) breach of express warranty on behalf of the nationwide class or each statewide subclass, (2) breach of the implied warranty of merchantability on behalf of the nationwide class or each statewide subclass, (3) violation of the California Song–Beverly Consumer Warranty Act on behalf of the California subclass, and (4) violation of the federal Magnuson–Moss Warranty Act presumably on behalf of the nationwide class. Id. ¶¶ 213–67, 284–96. Their fraud claims consist of (1) a common-law claim for deceit and fraudulent concealment on behalf of each statewide subclass and (2) claims for violations of state consumer protection statutes on behalf of the relevant statewide subclass.¹ Id. ¶¶ 268–77, 297–535. Finally, their unjust enrichment claims are asserted on behalf of the nationwide class based on the universal principles of equity. Id. ¶¶ 278–83.

In June 2017, Huawei and Google filed their Motions to Dismiss. Huawei's argument regarding lack of personal jurisdiction was addressed in a prior order. See ECF 113. Here, the Court focuses on the sufficiency of the CAC. Specifically, both Huawei's and Google's Motions to Dismiss assert that Plaintiffs have failed to allege sufficient facts entitling them to relief on their claims. Huawei Mot. 9–28; Google Mot. 3–29. Huawei and Google also request that the Court strike Plaintiffs' class allegations. Huawei Mot. 26–28; Google Mot. 29.

II. LEGAL STANDARD

A. Rule 12(b)(6)

"A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’ " Conservation Force v. Salazar , 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001) ). When determining whether a claim has been stated, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc. , 643 F.3d 681, 690 (9th Cir. 2011).

However, the Court need not "accept as true allegations that contradict matters properly subject to judicial notice" or "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig. , 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001) ). While a complaint need not contain detailed factual allegations, it "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting 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 the alleged facts "allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

B. Rule 12(f)

Federal Rule of Civil Procedure 12(f) permits a court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The function of a motion made under this rule is "to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Whittlestone, Inc. v. Handi–Craft Co. , 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. Fogerty , 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds by Fogerty v. Fantasy, Inc. , 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) ). "While a Rule 12(f) motion provides the means to excise improper materials from pleadings, such motions are generally disfavored because the motions may be used as delaying tactics and because of the strong policy favoring resolution on the merits." Barnes v. AT & T Pension Ben. Plan–Nonbargained Program , 718 F.Supp.2d 1167, 1170 (N.D. Cal. 2010).

The decision to strike a portion of a party's pleading is within the sound discretion of the court. Nurse v. United States , 226 F.3d 996, 1000 (9th Cir. 2000). If allegations are stricken, leave to amend should be freely given when doing so would not cause prejudice to the opposing party. See Wyshak v. City Nat'l Bank , 607 F.2d 824, 826 (9th Cir. 1979) (per curiam).

III. DISCUSSION

Both Huawei and Google contend that Plaintiffs have failed to allege sufficient facts entitling them to relief on their claims. Before turning to the merits of those arguments, the Court addresses Google's request for judicial notice.

A. Request for Judicial Notice

In connection with its Motion to Dismiss, Google seeks judicial notice of two documents: Google's U.S. Terms of Sale and the Nexus 6P webpage. ECF 57. Portions of the documents are referenced in the CAC, and both are capable of accurate and ready determination because they are publicly available online. These documents are properly subject to judicial notice. See Fed. R. Evid. 201(b) ; Knievel v. ESPN , 393 F.3d 1068, 1076 (9th Cir. 2005). Plaintiffs did not formally object to Google's request. Accordingly, Google's request for judicial notice is GRANTED.

B. Motions to Dismiss for Failure to State a Claim

Huawei and Google contend that Plaintiffs' CAC provides insufficient allegations to properly plead their causes of action. The Court begins by making some general observations about changes that should be made to any amended pleading. The Court then addresses the...