Keegan v. Am. Honda Motor Co.

Citation838 F.Supp.2d 929,76 UCC Rep.Serv.2d 440
Decision Date06 January 2012
Docket NumberCase No. CV 10–09508 MMM (AJWx).
PartiesDavid J. KEEGAN; Luis Garcia, Betty Kolstad; Carol Hinkle; Eric Ellis; Charles Wright; Jonathan Zdeb; individually and behalf of all others similarly situated, Plaintiff, v. AMERICAN HONDA MOTOR CO, INC.; Honda of America Manufacturing, Inc., Defendant.
CourtU.S. District Court — Central District of California

OPINION TEXT STARTS HERE

Cory S. Fein, Cynthia B. Chapman, Michael A. Caddell, Caddell and Chapman, Houston, TX, Matthew Mendelsohn, Mazie Slater Katz & Freeman LLC, Roseland, NJ, Payam Shahian, Ramtin Shahian, Strategic Legal Practices APC, Los Angeles, CA, Robert L. Starr, Law Office of Robert L. Starr, Woodland Hills, CA, for Plaintiff.

Alexa C. Warner, David Johnson, Eric S. Mattson, Michael C. Andolina, Sidley Austin LLP, Chicago, IL, Eric Y. Kizirian, Roy M. Brisbois, Lewis Brisbois Bisgaard and Smith LLP, Los Angeles, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

MARGARET M. MORROW, District Judge.

On December 10, 2010, plaintiffs David J. Keegan, Luis Garcia, Betty Kolstad, Carol Hinkle, Eric Ellis, Charles Wright, and Jonathan Zdeb filed this putative class action against American Honda Motor Co., Inc., and Honda of America Manufacturing, Inc., alleging claims under the California Consumer Legal Remedies Act (“CLRA”), the California Unfair Competition Law (“UCL”), the Song–Beverly Act, the Magnuson–Moss Warranty Act, California Commercial Code Section 2313, and various states' consumer protection and implied warranty statutes.1 On May 23, 2011, plaintiffs filed a first amended complaint.2 Defendants filed a motion to dismiss, which plaintiffs opposed.3 The parties have also filed various requests for judicial notice in support of their briefs.4

I. FACTUAL BACKGROUND
A. The Complaint's Allegations

Plaintiffs bring this action on behalf of all individuals who purchased or leased certain allegedly defective model year 2006 and 2007 Honda Civic and 2006 through 2008 Honda Civic Hybrid vehicles (collectively, the “class vehicles”) that were designed, manufactured, distributed, marketed, sold, and leased by defendants.5 Plaintiffs allege that the class vehicles and in particular, their rear suspension, are defective.6 Specifically, plaintiffs allege that the rear control arm originally installed in the vehicles was too short.7 This purported defect affects the alignment and geometry of the rear suspension, causing the vehicles to become misaligned. this in turn results in uneven and premature wear on the rear tires.8 The misalignment also causes “occupants to experience an extremely rough ride, as well as exceptionally loud and disruptive noise, while driving the class vehicles.” 9

Plaintiffs allege that Honda learned of the suspension defect through pre-release testing data, early consumer complaints to Honda and its dealers, testing conducted in response to the complaints, and “other internal sources.” 10 Plaintiffs contend that Honda “actively concealed” the defect from its customers,11 but had a duty to disclose because the defect poses an “unreasonable safety hazard,” and it had “exclusive knowledge or access to material facts” about the vehicles and the rear suspension problem that were unknown and not reasonably discoverable by plaintiffs.12

Plaintiffs contend that the defect creates a safety hazard because a driver has only three means of controlling a car—braking, accelerating, or steering. Each is dependent on rolling friction with the ground beneath the wheels, and the only contact the vehicle has with the ground is through its tires. 13 The defect allegedly causes uneven tread wear on the tires, which can result in “catastrophic” tire failure because one side of the tire receives more pressure than the other.14 The defect thus can “suddenly and unexpectedly cause tire failure while the vehicle is in operation,” which can lead to car accidents, personal injury, or death.15

The cost of repairing the defect and replacing the worn tires allegedly can run “hundreds, if not thousands, of dollars.” 16 The defect also purportedly requires that tires be replaced prematurely, sometimes after less than 20,000 miles.17 Plaintiffs assert that the expected tread wear of properly functioning tires in the class vehicles is approximately 75,000 or more.18

Plaintiffs contend that “hundreds, if not thousands,” of purchasers and lessees of class vehicles have experienced the defect, filed complaints with the NHTSA, and posted information about the problem on the internet.19 They maintain that although Honda knew of the problems, it took no steps to notify customers of the defect or provide relief until January 2008, two years after the class vehicles had been placed on the market.20 At that point, Honda issued a technical service bulletin (“TSB”) to its dealers and began covering “certain costs associated with temporary correction” of the defect, such as replacing the rear control arm. It also provided reimbursement for prematurely worn tires.21 By the time Honda took these steps, however, many of the vehicles had already been sold or leased, and class members had replaced worn tires “without adequate reimbursement.” 22 Plaintiffs allege that, although the TSB purportedly did not reference certain class vehicles, the defects it noted are found in all class vehicles. 23

The TSB stated that the too-short rear control arms should be replaced with longer control arms.24 Plaintiffs assert that the recommended modification is “only a temporary fix” that does not address the underlying problem. They contend that consumers whose vehicles are modified will experience suspension defects in the future, which will require costly repairs, and give rise to safety hazards.25 Plaintiffs allege that defendants know the recommended modification does not fix the defect and that it will only “prolong the amount of time that will elapse” before the defect manifests again.26 They contend the delay is designed to ensure that the defect occurs outside the warranty period, shifting financial responsibility for the defect to class members.27

Although the TSB appears to concern vehicles still under warranty, plaintiffs assert that in practice, it is limited to the “most persistent customers ... who visit Honda's dealers and complain loudly enough about the Suspension Defect and the premature tire wear it causes.” 28 They contend that Honda's dealers fail to advise consumers about the cause of the tire wear they are experiencing and about the TSB. Despite knowing of the defect since 2006, and of the proposed fix for it since 2008, dealers purportedly attribute the tire wear to consumers' “driving habits, road conditions, and improper maintenance.” 29 Honda has not issued a recall for the vehicles, offered reimbursement for costs incurred, or provided replacement or repairs. 30

B. The Plaintiffs

The complaint was filed on behalf of seven named plaintiffs located in six different states. Although plaintiffs' specific interactions with Honda regarding the alleged defect, and the severity of the defect they have experienced, vary, each purchased a Honda Civic from a Honda dealer and complained about premature wear of the tires. The plaintiffs are:

David J. Keegan, a California citizen and resident of Dublin, who purchased a new 2007 Honda Civic from Dublin Honda in April 2007; 31

Luis Garcia, a New York citizen, who purchased a new 2007 Honda Civic EX on March 17, 2007; 32

Eric Ellis, a resident of Adrian, Oregon, who purchased a new 2007 Honda Civic LX from Tom Scott Honda in Nampa, Idaho on July 6, 2007; 33

Charles Wright, a citizen of Montana and resident of Missoula, who purchased a Honda Civic Hybrid from University Motors in Missoula on March 3, 2006; 34

Betty Kolstad, a citizen of California and resident of Big Ben, California, who purchased a 2006 Honda Civic from Auto West Honda in Roseville, California on October 15, 2009, with a certified pre-owned car warranty for 60 days. 35

Carol Hinkle, a citizen of North Carolina and resident of Salisbury, who purchased a Honda Civic LX at Salisbury Honda in April 2008; 36

Jonathan Zdeb, a resident of West Palm Beach, Florida, who purchased a new 2007 Honda Civic SI from Holman Honda in Fort Lauderdale, Florida in January 2007.37

II. DISCUSSION
A. Legal Standard Governing Motions to Dismiss Under 12(b)(6)

A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in the complaint. A Rule 12(b)(6) dismissal is proper only where there is either a “lack of a cognizable legal theory,” or “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). The court must accept all factual allegations pleaded in the complaint as true, and construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir.1996); Mier v. Owens, 57 F.3d 747, 750 (9th Cir.1995).

The court need not, however, accept as true unreasonable inferences or legal conclusions cast in the form of factual allegations. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 553–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do”). Thus, a plaintiff's complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ... A claim has facial plausibility when the 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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (20...

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