Reniger v. Hyundai Motor Am.

• Decision Date: 18 August 2015
• Docket Number: Case No. 14–3612 SC
• Citation: 122 F.Supp.3d 888
• Parties: Julia Reniger, Greg Battaglia, Oren Jaffe, Lucia Saitta, and Ann Mancuso, individually and on behalf of all others similarly situated, Plaintiffs, v. Hyundai Motor America, a California corporation, and Hyundai Motor Company, a foreign corporation, Defendants.
• Court: U.S. District Court — Northern District of California

122 F.Supp.3d 888

Julia Reniger, Greg Battaglia, Oren Jaffe, Lucia Saitta, and Ann Mancuso, individually and on behalf of all others similarly situated, Plaintiffs,

v.Hyundai Motor America, a California corporation, and Hyundai Motor Company, a foreign corporation, Defendants.

Case No. 14–3612 SC

United States District Court, N.D. California.

Signed August 18, 2015

Mark Samuel Greenstone, Lionel Z. Glancy, Glancy Prongay & Murray LLP, Los Angeles, CA, for Plaintiffs.

Eric Y. Kizirian, Kimberly Thanh Chung, Michael K. Grimaldi, Lewis, Brisbois, Bisgaard and Smith, Los Angeles, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS AND DENYING MOTION TO STRIKE

Samuel Conti, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Now before the Court are two motions in this putative class action alleging consumer protection, fraud, and warranty claims related to alleged low-speed stalling of Hyundai Santa Fe vehicles. See ECF No. 21 ("SAC"). First, Defendants Hyundai Motor America and Hyundai Motor Company ("HMC") (collectively, "Hyundai") have moved to strike Plaintiffs' class action allegations and allegations relating to the Kia Motor Group on the grounds that these allegations are either contrary to California and Ninth Circuit law or otherwise redundant, impertinent, and immaterial under Federal Rule of Civil Procedure 12(f). ECF No. 31 ("Mot. to Strike"). Second, Defendants move to dismiss several of the named Plaintiffs for lack of standing and to dismiss the balance of Plaintiffs' allegations for failure to state a claim. ECF No. 33 ("MTD").

These motions are fully briefed,¹ and appropriate for resolution without oral argument under Civil Local Rule 7–1(b). For the reasons set forth below, the motion to dismiss is GRANTED IN PART and DENIED IN PART and the motion to strike is DENIED.

II. BACKGROUND

The Hyundai Santa Fe is a midsized sport utility vehicle manufactured by Hyundai since 2000. Plaintiffs allege that model year 2010–2012 Santa Fes have a safety defect that causes the vehicle to totally lose power (or "stall"). When an affected Santa Fe stalls, power steering and brakes are lost as well, creating a potentially dangerous situation in which it is difficult to control the vehicle. Plaintiffs contend that Defendants had knowledge of this alleged defect through a variety of sources, including consumer complaints and similar problems experienced by Kia Motors, another automobile manufacturer, with its Kia Sorento, a midsized sport utility vehicle much like the Santa Fe.

Plaintiffs' allegations of knowledge and concealment of this alleged defect stem from a series of Technical Service Bulletins ("TSBs") issued by Hyundai since 2010 "describing procedures that have been implemented by dealers to remedy the Stalling Defect without success." SAC ¶¶ 7. These TSBs describe procedures for cleaning the "Electronic Throttle Control ... throttle body" to address idling, power, and throttle issues, and updates to the "Engine Control Module" to improve shifting at low throttle, coasting to a stop, and a " ‘limp home’ condition caused by performance/power issues." Id. at ¶¶ 8–10.

In 2014, Hyundai announced a "Voluntary Service Campaign," which provides a free software update to address the risk that "during a specific set of operating conditions," model year 20102012 vehicles can lose power or stall "when coming to a stop during braking at low speed...." Id. at ¶ 13. Hyundai notified regulators of the campaign, and states it sent a letter to all owners and lessees of Santa Fes in the affected model years notifying them of the issue and offering a free software update at dealerships to address the stalling problem. MTD at 3 (citing SAC Ex. H). However, Plaintiffs allege this is only the illusion of a fix and has, in certain cases, not been made available to the owners or lessees of all affected vehicles (including two of the named plaintiffs). See SAC at ¶¶ 12–14, 18.

The named Plaintiffs in this putative class action are five current or former owners of new or used Santa Fes from model years 2010–2012. They seek to represent a nationwide class of owners and lessees of 2010–2012 Santa Fes and three subclasses made up of (1) New York owners and lessees, (2) California owners and lessees, and (3) California owners and lessees who are "consumers" within the meaning of California Civil Code Section 1761(d). Plaintiffs allege nine causes of action, including violations of California and New York consumer, false advertising, and implied warranty laws; breach of the Magnuson–Moss Warranty Act ("Mag.-Moss"), 15 U.S.C. § 2301 ; and common law fraud. SAC ¶¶ 107–195.

While not all of the named plaintiffs allege out-of-pocket costs associated with the stalling defect, all allege that they owned Santa Fes from model years 2010–2012 and experienced unforeseen and sometimes dangerous stalling. One, Reniger, sold her Santa Fe prior to the service campaign after her vehicle stalled on several occasions and her Hyundai dealer was unable to remedy the stalling even after paying for service she understood would help with the stalling. Id. at ¶¶ 40–44. Two other named plaintiffs, Saitta and Mancuso, brought their vehicles in for Hyundai's service campaign, but continued to experience stalling issues thereafter. Id. at ¶ 19. Three, Mancuso, Battaglia, and Jaffe, did not receive notice of the service campaign, and own Santa Fes that are listed as ineligible for the service campaign on Hyundai's service campaign website, https://www.hyundaiusa.com/campaign929/. Id. at ¶¶ 51, 58. Of these, only Mancuso brought her vehicle in for the service campaign, and Battaglia and Jaffe's vehicles remain unfixed and are allegedly still afflicted. Id.

Now, arguing these allegations are insufficient to confer Article III standing or state a claim upon which relief can be granted, Hyundai moves to dismiss. Hyundai also seeks to strike Plaintiffs' class action allegations, arguing that these (and Plaintiffs' allegations about the Kia Sorento and Hyundai's relationship with Kia) are "an insufficient defense or ... redundant, immaterial, impertinent, or scandalous matter" within the meaning of Federal Rule of Civil Procedure 12(f). Plaintiffs oppose.

The Court ordered supplemental briefing on both (1) whether standing of a single plaintiff satisfies the minimum needs of Article III standing and (2) whether a transaction is required vice allegations of a safety concern. Order of the Court dated June 12, 2015, ECF No. 45 ("Supp. Briefing Order"). Parties have provided all responsive briefs. ECF Nos. 48 ("Supp.Mot."), 49 ("Supp.Opp'n"), 50 ("Supp.Reply").

III. LEGAL STANDARDS

A. Federal Rule of Civil Procedure 12(b)(1)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges the Court's subject-matter jurisdiction. Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir.2010). Because Article III standing relates to the Court's subject-matter jurisdiction, it is properly raised on a Rule 12(b)(1) motion, and the party asserting jurisdiction "bears the burden of proving its existence." Id. at 1121–22.

To satisfy Article III's standing requirements, Plaintiffs must demonstrate that "(1)[they] ha[ve] suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180–81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ).

B. Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)"tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The allegations made in a complaint must be "sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively" and "must plausibly suggest an entitlement to relief" such that "it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.2011).

C. Federal Rule of Civil Procedure 9(b)

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." See Kearns v. Ford Motor Co. , 567 F.3d 1120, 1124 (9th Cir.2009). "To satisfy Rule 9(b), a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about [the purportedly fraudulent] statement, and why it is false." Cafasso ex rel. United States v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1055 (9th Cir.2011) (internal quotation marks and citations omitted) (alteration in original).

D. Federal Rule of Civil Procedure 12(f)

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