Smith v. Ford Motor Co.

• Decision Date: 13 September 2010
• Docket Number: No. C–06–00497 MMC.,C–06–00497 MMC.
• Parties: Richard SMITH and Rebecca Klein, on behalf of themselves and all others similarly situated, Plaintiffs,v.FORD MOTOR COMPANY, and Does 1–100, inclusive, Defendants.
• Court: U.S. District Court — Northern District of California

749 F.Supp.2d 980

Richard SMITH and Rebecca Klein, on behalf of themselves and all others similarly situated, Plaintiffs,

v.FORD MOTOR COMPANY, and Does 1–100, inclusive, Defendants.

No. C–06–00497 MMC.

United States District Court, N.D. California.

Sept. 13, 2010.

Jeffrey Louis Fazio, Fazio & Micheletti LLP, San Ramon, CA, Dina Elizabeth Micheletti, Fazio & Micheletti LLP, Pleasanton, CA, H. Sinclair Kerr, Jr., Michael Kai Ng, Michael John Von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA, for Plaintiffs.Brad W. Petersen, Snell & Wilmer LLP, Phoenix, AZ, John M. Thomas, Byran Cave LLP, St. Louis, MI, Robert J. Gibson, Warren Earl Platt, Snell & Wilmer LLP, Costa Mesa, CA, Timothy A. Devine, Honigman Miller Schwartz & Cohn LLP, Detroit, MI, for Defendants.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

MAXINE M. CHESNEY, District Judge.

Before the Court are defendant Ford Motor Company's (“Ford”) Motion for Summary Judgment as to Plaintiff Richard Smith (“Smith”), and Motion for Summary Judgment as to Plaintiff Rebecca Klein (“Klein”), each filed November 17, 2008. Plaintiffs have filed a joint opposition to both motions, to which Ford has replied. Having read and considered the papers filed in support of and in opposition to the motions, the Court hereby rules as follows.¹

PROCEDURAL AND FACTUAL BACKGROUND ²

On January 25, 2006 plaintiffs filed the instant action. On September 22, 2006, plaintiffs filed their Third Amended Complaint (“TAC”), in which plaintiffs allege that Ford unlawfully concealed information concerning the failure rate of the ignition locks in its 2000 through 2006 model year Focus vehicles, provided an unconscionable standard warranty, and maintained a secret warranty adjustment program.

An ignition lock is the vehicle part in which the key is inserted and turned to activate the ignition; its purpose is to start the car. When an ignition lock fails, the driver is prevented from turning the key. ( See Declaration of Dina E. Micheletti (“Micheletti Decl.”) Ex. 7 at 31132–33.) According to Ford's internal engineering specifications, its ignition locks are designed to function for at least 80,000 cycles without maintenance.³ ( See Declaration of Jeffrey L Fazio (“Fazio Decl.”) Ex. C at SNYF 000489; see also Micheletti Decl. Ex. A (Deposition of Gerald P. Bonnici (“Bonnici Dep.”) at 261:17–23.) Thus, by plaintiffs' calculation “[i]f owners start their Focus 10 times per day, every day, for as long as they own their vehicle, the ignition lock would be cycled 3,650 times a year, thereby taking more than 20 years for an ignition lock to reach 80,000 cycles.” ( See Pls.' Opp'n at 3:19–4:1.)

In the instant litigation, plaintiffs contend the ignition locks in the subject Focus vehicles suffered from two separate but related defects, which plaintiffs characterize as the “ergonomic defect” and the “mechanical defect” (collectively, the “ignition-lock defect”). ( See Pls.' Opp'n at 5:3–6:2.) As described in a January 21, 2005 email written by Gerald P. Bonnici (“Bonnici”), Ford's “engineer with responsibility for ignition locks in all Ford North American vehicles” ( see Def.'s Reply at 5:4–5), because of the manner in which the ignition lock is attached to the steering column, the “angle [in which] you put your key in [and] out of [the] ignition lock is very awkward,” requiring “you to bend your wrist back to an ‘uncomfortable’ position—nearly horizontal instead of the normal 10:00–11:00 position” (the “ergonomic defect”). ( See Micheletti Decl. Ex. 7 at SNYF 031132–33.) As Bonnici further explains:

[W]hen you shut off your car, you start rotating back [and] pulling on the key in the “normal” key out position. But because this design requires extra rotation from that “normal” position, customers end up pulling the key out against the tumblers before the lock is ready to release the key. Repeated occurrences of this bend the tumblers[.] [F]inally, bent tumblers prevent [the] lock from turning.

( See id.) According to Bonnici, the ignition lock's tumblers' susceptibility to bending presented a “durability issue” (the “mechanical defect”). ( See id. Ex. 19 at SNYF 00031212, Ex. 23 at SNYF 00021200.)

The Focus was introduced in the United States in 1999 as a 2000 model year vehicle. ( See Declaration of Gerald P. Bonnici (“Bonnici Decl.”) ¶ 14.) In a June, 1999 document, authored prior to the “launch” of the Ford Focus in the United States, Ford engineers reported that inserting the key into the ignition required “high effort.” ( See Micheletti Decl. Ex. 54 at SNYF–00022037.) The 1999 launch of the Focus was “followed by a relatively large number of warranty repairs related to the ignition lock on the 2000 model year Ford Focus and the 2001 model year Focuses built before October 2000,” described as the “ignition-lock launch spike.” ( See Bonnici Decl. ¶¶ 15–16.) As of July 31, 2000, ignition locks installed in the 2000 Focus had failed at a rate of 53.89 R/1000 (or 5.4 percent), which Ford characterized as a rate “significantly worse than other car lines.” ( See Fazio Decl. Ex. I at SNYF–0002709).

Following the launch spike, in order to counter the high warranty repair rates, Ford and its ignition lock manufacturer made manufacturing and design changes to the subject ignition locks ( see Bonnici Decl. ¶¶ 16, 18), which resulted in a substantial decrease in the warranty repair rates ( see id. ¶ 17).⁴ Specifically, from a warranty repair rate of 24.3 percent for its 2000 model year Focus vehicles, Ford saw the rate drop to 6.9% for its 2001 model year vehicles, then drop again to 3.1% for its 2002 model year vehicles, before rising to 12% for its 2003 model year vehicles. ( See Micheletti Decl. Ex. 2.)

Additionally, during the relevant period, Ford operated an “After–Warranty Assistance” (“AWA”) program, which is described by Ford as “payments made on a case-by-case basis for repairs not covered by the vehicle warranty, service parts warranty or any Ford [Extended Service Plan], or any non-Ford service contract or aftermarket additive service warranty.” ( See Declaration of Joseph C. Bradley (“Bradley Decl.”) Ex. 3 at 2.) The AWA program covered repairs where a Ford vehicle was “not performing to customer expectations and there [was] an opportunity for increased customer satisfaction and owner loyalty.” ( See Bradley Decl. Ex. 3 at 6.) Ford's AWA manual provided a number of questions for dealers to consider when making a decision to offer AWA to a customer. ( See Bradley Decl. Ex. 3 at 6–7.) Pursuant to the AWA program, Ford replaced 16,227 Focus ignition locks on its model year 2000 through 2006 Ford Focus vehicles, 9655 of which were repaired for 2000 model year Focus vehicles. ( See Micheletti Decl. Ex. 2 at 2.) ⁵

Smith purchased a new 2003 model year Ford Focus from a Ford dealership on October 11, 2003. ( See Deposition of Richard Smith (“Smith Dep.”) Ex. 2.) Smith also purchased Ford's standard New Vehicle Limited Warranty, under which Ford agreed that “authorized Ford Motor Company dealers [would] repair, replace, or adjust all parts on [Smith's] vehicle that [were] defective in factory-supplied materials or workmanship” for “three years or 36,000 miles.” ( See Smith Dep. 20:18–22; see also Bradley Decl. ¶ 5, Ex. 1 at 5–6). In November 2005, after Smith had driven his Focus 56,705 miles, Smith's ignition lock failed, preventing him from starting his vehicle. ( See Smith Dep. Ex. 1 at 89–90). Smith paid $521 to have his ignition lock replaced at a Ford dealership. ( See id.)

Klein purchased a used 2003 model year Ford Focus from Honda of Oakland in May 2004 ( see Deposition of Rebecca Klein (“Klein Dep.”) Ex. 4) after it previously had been driven for 37,274 miles as a rental car ( see Klein Dep. 81:22–82:20). Klein bought the vehicle “as-is,” with no warranty. ( See Klein Dep. 55:1–24, 66:4–13, Exs. 3, 4.) In December 2005, the ignition lock failed and Klein was unable to start her vehicle. ( See Klein Dep. 47:17–48:5.) A locksmith replaced the ignition lock for $232. ( See Klein Dep. 47:5–48:5, Ex. 3 at 6.) In September 2006, Klein's ignition lock again failed, and she replaced it for $244. ( See Klein Dep. 45:9–46:2, Ex. 3 at 1.)

In their TAC Plaintiffs assert state law claims against Ford for (1) Declaratory Relief; (2) Fraudulent Concealment/Nondisclosure; (3) Unjust Enrichment; (4) Unfair and Deceptive Acts and Practices in Violation of the Consumers Legal Remedies Act California's Consumer Legal Remedies Act (“CLRA”), Cal. Civ.Code § 1750 et. seq.; and (5) Unfair, Fraudulent, and Unlawful Practices under the Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code sections 17200–17209. ( See TAC ¶¶ 79–107.) ⁶ Ford moves for summary judgment as to each of plaintiffs' claims.

LEGAL STANDARD

Rule 56 of the Federal Rules of Civil Procedure provides that a court may grant summary judgment “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” See Fed.R.Civ.P. 56(c).

The Supreme Court's 1986 “trilogy” of Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), requires that a party seeking summary judgment show the absence of a genuine issue of material fact. Once the moving party has done so, the nonmoving party must “go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” See Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (internal quotation and citation omitted). “When the moving party has carried its burden under Rule 56(c), its opponent must do more...