Isuzu Motors Ltd. v. Consumers Union of U.S., Inc.

• Decision Date: 09 April 1998
• Docket Number: No. CV 97-5686 RAP RNBX.,CV 97-5686 RAP RNBX.
• Citation: 12 F.Supp.2d 1035
• Court: U.S. District Court — Central District of California
• Parties: ISUZU MOTORS LIMITED, et al., Plaintiffs, v. CONSUMERS UNION OF UNITED STATES, INC., Defendant.

Page 1035

12 F.Supp.2d 1035

ISUZU MOTORS LIMITED, et al., Plaintiffs, v. CONSUMERS UNION OF UNITED STATES, INC., Defendant.

No. CV 97-5686 RAP RNBX.

United States District Court, C.D. California.

April 9, 1998.

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Christopher C. Spencer, Robert M. Buell, McGuire Woods Battle & Boothe, Richmond, VA, Mark V. Berry, Bowman & Brooke, Torrance, CA, Jonathan W. Lubell, Frank McClain-Sewer, Morrison Cohen Singer & Weinstein, New York City, Andrew M. White, Melvin N.A. Avanzado, White O'Connor Curry Gatti & Avanzado, Los Angeles, CA, Richard A. Bowman, Bowman & Brooke, Minneapolis, MN, for plaintiffs.

John J. Quinn, Patricia A. Libby, Craig N. Hentschel, Arnold & Porter, Los Angeles, CA, Barry G. West, Jessica D. Lazarus, Corey E. Klein, Gaims Weil West & Epstein, Los Angeles, CA, Patrick A. Dawson, Dawson & Huddleston, Marietta, GA, Michael N. Pollet, Pollet & Felleman, New York City, for defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS PURSUANT TO FED.R.CIV.P. 12(b)(6) AND 9(g)

PAEZ, District Judge.

I. Introduction

This diversity action concerns defendants Consumers Union of United States, Inc. ("CU") and R. David Pittle's statements and publications regarding the safety of the Isuzu Trooper, a sport utility vehicle ("SUV") Plaintiffs Isuzu Motors Ltd. ("Manufacturer"), Isuzu Motors America, Inc. ("Importer") and American Isuzu Motors, Inc. ("Distributor") (collectively "plaintiffs" or "Isuzu") assert claims for (1) defamation from a continuing course of conduct; (2) defamation from specific publications; (3) product disparagement from a continuing course of conduct; (4) product disparagement from specific publications; (5) unlawful, unfair and fraudulent business practices under Cal. Bus. & Prof.Code; (6) intentional interference with business relations; and (7) declaratory relief.

Plaintiffs allege that beginning in August, 1996, and continuing to date, in both its magazine Consumer Reports and in numerous other print, broadcast and Internet publications, defendant CU made a series of false statements about Isuzu and the Isuzu Trooper to the effect that (1) the 1995-96 Trooper was and is more prone to tip up or roll over than all other SUVs; (2) the Trooper was and is dangerous and unsafe when operated in "real-world" conditions; (3) the 1995-96 Trooper was and is uniquely and inherently prone to tip up or roll over during "real-world" driving maneuvers; (4) Isuzu and its officials refused to meet with defendants to discuss and review defendants' purported test data regarding the Trooper's alleged safety problems; and (5) Isuzu and its officials were ignoring serious safety problems and knowingly placing consumers at grave risk, all in the name of profits.

Plaintiffs allege CU tested the Trooper the day after the National Highway Transportation Safety Administration ("NHTSA") rejected CU's proposed roll-over resistance standard for SUVs. Plaintiffs contend that CU used unscientific tests and unrealistic driving maneuvers to create dramatic tip-up effects with the Trooper, as compared with other SUVs, in order to demonstrate that the NHTSA was wrong to reject CU's proposed rollover safety standard.

Pending before the Court is the Motion of Defendants Consumers Union of United States, Inc. and R. David Pittle to Dismiss Plaintiffs' Claims for Relief pursuant to Rule [] ... 12(b)(6) and Rule 9(g) of the Federal Rules of Civil Procedure ("Motion") Defendants originally moved to dismiss on a number of grounds. The Court previously put aside defendants' 12(b)(6) motion to dismiss in light of the general rule that courts should "pass on jurisdictional issues before considering whether a claim [is] stated by the complaint." See Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990). After the hearing on defendants' motion to dismiss or transfer venue under 12(b)(2) and 12(b)(3), plaintiffs resolved issues of personal jurisdiction and venue by dismissing defendant Pittle from the action. Accordingly, the Court now turns to defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and 9(g). Upon consideration of the parties' papers submitted in conjunction with the motion, and the oral arguments of counsel, defendant CU's motion is GRANTED IN PART AND DENIED IN PART as set forth in detail below.

II. Factual Allegations

Isuzu Motors Limited (the "Manufacturer"), which designs and manufactures the Trooper, is a Japanese corporation with its principal place of business in Japan. Isuzu Motors America, Inc. (the "Importer"), which imports the Trooper from Japan to the United States, is a Michigan corporation with its principal place of business in Cerritos, California. American Isuzu Motors, Inc. (the "Distributor") is a California corporation with its principal place of business in Whittier, California and is the sole distributor for the Trooper in the United States. Defendant CU is a citizen of New York. Complaint, ¶¶ 9-13.

Plaintiffs allege that the 1995-96 Trooper has a safety record comparable to safety records of other SUVs and that prior to defendants' defamatory statements no other publication had reported a "rollover problem" with the 1995-96 Trooper. Id. ¶¶ 14-15. According to plaintiffs, prior to defendant's defamatory statements, CU was aware that its testing procedures had been rejected by the United States National Highway Transportation Safety Administration ("NHTSA") and by the Transport and Road Research Laboratory of Great Britain's Department of Transportation, among others, because CU's "Short Course" fails to reflect real-world conditions and is overly driver dependant, making it unreliable and unscientific. Id., ¶ 16-25.

Plaintiffs allege that defendant "rigged" the Trooper test results by using different steering inputs and pathways through the Short Course and attaching "outriggers" to the test vehicle as part of defendants' campaign to force the NHTSA to establish a federal rollover safety standard. Id., ¶ 26-28. Accordingly, plaintiffs assert that defendant knew its allegedly defamatory statements about the Trooper were false.

Plaintiffs set forth the allegedly defamatory statements at length in their 82-page complaint and 16 exhibits to the complaint. In brief, plaintiffs allege that defendant began a campaign that defamed them, beginning on August 20, 1996, by holding a press conference and by publishing (1) an August 20, 1996, press release announcing that Consumer Reports found the 1995-96 Trooper "Not Acceptable" because of a rollover hazard; (2) videotapes showing the Trooper during a June 6, 1996, "test run"; (3) a recorded telephone message at a toll-number; (4) a "full test report" in online databases and in Consumer Reports "Facts by Fax" service; (5) the October, 1996, issue of Consumer Reports; (6) Pittle's statements on several television programs, including NBC News, "Sunrise" and "Today" and CBS' "This Morning"; (7) the November, 1996, issue of Consumer Reports; (8) a December 23, 1996, press release and Internet posting and transmission via PR Newswire regarding CU's communications with NHTSA regarding the Trooper and CU's response to Isuzu's criticism of the CU findings; (9) the March, 1997, issue of Consumer Reports; (10) a May 14, 1997, press release entitled "Statement of Dr. R. David Pittle, Vice President and Technical Director Consumers Union (Publisher of Consumer Reports Magazine)," reiterating CU's Not Acceptable rating of the 1995-96 Trooper; (11) CU's 1997 Car Guide CD-Rom; (12) an article in the July, 1997, issue of Consumer Reports reiterating CU's statements about the Trooper; (13) a press release regarding the NHTSA July 25, 1997, order; (14) a July 27, 1997, Dow Jones News Service article quoting Pittle as saying he did not expect CU to retract its reports on the Trooper despite the NHTSA findings and Isuzu's request for a retraction; (15) a July 28, 1997, USA Today article reiterating Pittle's statements and CU's position; and (16) similar defamatory and disparaging false statements and images concerning Isuzu and the 1995-96 Trooper. Id., ¶¶ 35-89.

Plaintiffs collectively contend that defendant published these statements regarding Isuzu with the intention of conveying false and defamatory meanings, including:

a. Isuzu and its officials were ignoring tip-up and rollover resistance safety and knowingly placing consumers at grave risk, all in the name of profits.

b. Isuzu is aware of a method of eliminating the risk of rollovers or tip-ups in the 1995 and 1996 Trooper at a minimal expense but refuses to implement that method c. Isuzu was and is not interested in (i) manufacturing, importing or selling to the public a safe product, (ii) learning about CU's "test" results, analyses and conclusions about the 1995-96 Trooper, (iii) making its products safe or (iv) correcting a dangerous condition in the 1995-96 Trooper.

d. Isuzu deliberately perpetrated a fraud on the public by manufacturing, importing and selling a vehicle which has an extreme and unique rollover propensity.

e. Isuzu knew that modification in the 1995-96 Isuzu Trooper significantly altered the Trooper's rollover resistance yet Isuzu fraudulently and dishonestly failed to inform the public of these substantial changes.

f. Isuzu knew changes in the 1995-96 Trooper from the previous Trooper model caused the 1995-96 Trooper to lack the rollover resistance present in all but one of the other vehicles defendants have tested.

g. Isuzu did not want to know if conclusions by its consultants about the inadequacies in CU's short course test of the 1995-96 Trooper were incorrect.

h. Isuzu was not and is not interested in protecting the lives and safety of its customers concerning the rollover resistance of the Trooper, but rather only in shielding its public image and making profits.

i. Isuzu has deliberately ignored a remedy suggested by CU which CU says could make the...