Platt Elec. Supply, Inc. v. Eoff Elec., Inc.

• Decision Date: 15 April 2008
• Docket Number: No. 05-15672.,05-15672.
• Citation: 522 F.3d 1049
• Parties: PLATT ELECTRICAL SUPPLY, INC., an Oregon corporation, Plaintiff-Appellant, v. EOFF ELECTRICAL, INC., Plaintiff, and Underwriters Laboratories, Inc., a Delaware not-for-profit corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

522 F.3d 1049

PLATT ELECTRICAL SUPPLY, INC., an Oregon corporation, Plaintiff-Appellant, v. EOFF ELECTRICAL, INC., Plaintiff, and Underwriters Laboratories, Inc., a Delaware not-for-profit corporation, Defendant-Appellee.

No. 05-15672.

United States Court of Appeals, Ninth Circuit.

Argued and Submission Deferred February 16, 2007.

Submitted February 14, 2008.

Filed April 15, 2008.

James O. Devereaux (argued), and Jan A. Kopczynski, Berding & Weil LLP, Alamo, CA, for Appellant Platt Electrical Supply, Inc.

Michael J. Abernathy (argued), and Christopher I. Cedillo, Bell, Boyd & Lloyd LLC, Chicago, IL, for Appellee Underwriters Laboratories, Inc.

Appeal from the United States District Court for the Northern District of California; Ronald M. Whyte, District Judge, Presiding. D.C. No. CV-03-00992-RMW.

Before: RONALD M. GOULD and JOHNNIE B. RAWLINSON, Circuit Judges, and ALFRED V. COVELLO,^* Senior Judge.

RAWLINSON, Circuit Judge:

In its complaint, Appellant Platt Electrical Supply, Inc. (Platt) alleged that Appellee Underwriters Laboratories, Inc. (UL), a non-profit consumer safety group, negligently misrepresented and fraudulently concealed that defective in-wall heaters were safe. Platt challenges the district court's grant of UL's motion to dismiss and motion for judgment on the pleadings. Platt contends that the district court erred in dismissing its negligent misrepresentation and fraudulent concealment claims as time-barred under California's statutes of limitations. Platt asserts that its claims were not time-barred in view of California's discovery rule and UL's fraudulent concealment. Platt also maintains that the district court erred in dismissing its claims without leave to amend the complaint.

We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm the judgment of the district court.

I. BACKGROUND

Platt filed its complaint in 2003. According to its complaint,¹ Platt was "engaged in the distribution, marketing, and wholesale supply of electrical products intended for consumer purchase and use." UL "is a not-for-profit corporation ... principally engaged in the business of formulating safety standards for new consumer products, testing such products against its standards, determining whether the product so tested conforms to the standards, and, if the product does comply, authorizing the product's manufacturer to imprint UL's distinctive mark on the complying product."

Platt asserted that Cadet Manufacturing Company (Cadet) "manufactured . . . in-wall space heaters under the names `Cadet' and `Encore.'" UL evaluated Cadet's heaters, and determined that the heaters complied with UL's safety standards. UL "authorized Cadet to include the UL mark on the labels of the Heaters." UL's "process is known as `listing', and a product that has qualified to bear the UL mark is said to be a `listed product.'"

Platt charged that by permitting these listings, "UL impliedly represented to Plaintiffs" that the heaters were "suitable for reasonably safe use as an in-wall heater . . ."

Platt alleged that the heaters "manufactured between 1978 and the present, and listed by UL since at least 1985, are inherently defective." According to Platt, "if the heaters had not been endorsed by UL then neither of the Plaintiffs would have engaged in the purchase, sale, advertisement, or distribution of the Heaters. Moreover, Plaintiffs are informed and believe, and based thereon allege, that at no time prior to a 1999 CPSC [Consumer Product Safety Commission] recall did they become aware that the Heaters were inherently defective."

Platt alleged that "based on the express approval by UL of the Heaters, [it] distributed in excess of nineteen-thousand [sic] (19,000) Cadet heaters."

Platt also asserted "that since at least 1988, UL became aware that the Heaters were exhibiting defects. . . . However, UL took no action relative to rescinding its endorsement of the product or notifying the general public, product distributors or retailers . . . of the dangerous defects inherent in the Heaters." "Despite its knowledge, as early as 1988, of the defects inherent in the Heaters, UL continued to list Cadet heaters." According to Platt, "Plaintiffs did not discover Defendants' wrongful conduct or its basis for liability until 2001 when they became involved in [sic] consumer class action . . . and were granted through pre-trial discovery limited access to Defendant UL's files concerning the Heaters." Additionally, Platt charged that "Defendants' wanton and reckless refusal to disclose such information fraudulently concealed from Plaintiffs crucial facts . . ."

"[I]n or around 1998, the [CPSC] became aware that Cadet heaters were defective. Accordingly, on or around January 14, 1999, the CPSC filed an administrative order recalling all Cadet heaters . . ." "Plaintiffs were required under controlling federal statute to bear a portion of the costs of conducting the recall."

"[C]ontemporaneous to the CPSC recall, a consumer class action was filed on behalf of all purchasers of the Heaters . . ." Platt "was named as a defendant . . . [and] entered into a settlement agreement with the class, pursuant to which Plaintiff PLATT continues to pay money to the class." According to Platt, it "has paid in excess of one-million one-hundred fifty-six-thousand dollars ($1,156,000.00) pursuant to the class settlement."

In its negligent misrepresentation claim, Platt alleged that "at least since 1989[UL] had knowledge that the Heaters failed and could, and in fact had, caused catastrophic injury and death. Despite such knowledge, [UL] continued to represent to the world at large that the Heaters were safe products." "[UL] continued to allow its mark to be placed on the Heaters knowing that consumers, distributors, and retailers rely on the mark as an assurance of safety. [UL] continued to make such material representations of material facts without an adequate basis or knowledge for making such representations." According to Platt, "[UL] failed to act because such action would constitute a tacit admission that [UL's] testing procedures were flawed and such an admission would undermine[UL's] position as the self-proclaimed leader in certifying the safety of consumer goods."

Platt also alleged that "[a]t no time prior to the Class Action or CPSC recall did Plaintiffs have any reason to suspect that the Heaters were unsafe. Plaintiffs relied on the UL mark as an assurance of the Heaters' safety and suitability for its end use . . ."

In its fraudulent concealment claim, Platt alleged that it was not required to conduct an independent investigation of the heaters' safety. Rather, Platt "heavily [relied] on the existence, or non-existence, of the UL mark on a good." Platt alleged that "[UL], by allowing their mark to remain on the Heaters, intentionally intended to mislead consumers, retailers, and distributors like Plaintiff into believing that [UL's] listing procedures accurately reflected that the Heaters were suitable and safe for their intended use by consumers and were to be absolutely relied on so that [UL] could maintain their position as self-proclaimed leaders in certifying the safety of consumer goods." Platt also asserted that UL "assumed a duty to disclose, whether by de-listing or public notification, any known incidents that might dissuade consumers, retailers and distributors like [Platt] from trading in the Heaters."

The district court determined that Platt was "on inquiry notice of their claims as early as 1999." Specifically, the court held that "once [Platt] became aware [through the CPSC recall and class action] that the cadet heaters they sold were potentially defective, and they began to suffer damages, [they] were on inquiry notice that UL, on whose mark they relied, may have either negligently tested or negligently endorsed those products. . . ." The district court, therefore, dismissed Platt's negligent misrepresentation claim as time-barred without leave to amend. However, the district court denied UL's motion to dismiss Platt's fraudulent concealment claim.

The district court subsequently granted UL's motion for judgment on the pleadings and dismissed Platt's fraudulent concealment claim as time-barred, again without leave to amend.

Platt dismissed its remaining equitable indemnification claim, and filed a timely notice of appeal.

II. STANDARDS OF REVIEW

We "review de novo the district court's decision to grant a motion to dismiss pursuant to FRCP 12(b)(6)." Watson, 436 F.3d at 1157 (citation omitted). "A claim should be dismissed only if it appears beyond doubt that the plaintiff can establish no set of facts under which relief could be granted." Id. (citation omitted).

We "review judgment on the pleadings de novo." Stanley v. Trustees of the Cal. State Univ., 433 F.3d 1129, 1133 (9th Cir. 2006) (citation omitted). "Judgment on the pleadings is proper when, taking all allegations in the pleading as true, the moving party is entitled to judgment as a matter of law." Id. (citation omitted).

The parties contest the applicable standard of review for the district court's dismissal of Platt's claims without leave to amend. Platt contends that the standard of review is de novo. UL counters that the standard of review is for an abuse of discretion.

This appeal involves the issue of whether any amendment would be futile due to dismissal pursuant to the applicable statutes of limitations. We review such issues for an abuse of discretion. See Naas v. Stolman, 130 F.3d 892, 893 (9th Cir.1997) ("[T]he district court did not abuse its discretion in denying leave to amend, as the Naases' potential amended claim would still be barred by the statute of limitations."); see also Flowers v. First Hawaiian Bank, 295 F.3d 966, 976 (9th Cir.2002) ("A district court, however, does not abuse its discretion in denying leave to amend where amendment would be futile.") (citation omitted).

III. DISCUSSION

A. The Discovery...