Young v. Cree, Inc.

• Decision Date: 09 April 2018
• Docket Number: CASE NO. 17-cv-06252-YGR
• Parties: JEFF YOUNG, Plaintiff, v. CREE, INC., Defendant.
• Court: U.S. District Court — Northern District of California

JEFF YOUNG, Plaintiff, v. CREE, INC., Defendant.

CASE NO. 17-cv-06252-YGR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

April 9, 2018

ORDER RE: MOTION TO DISMISS

Re: Dkt. Nos. 31, 32

Plaintiff Jeff Young brings this putative class action lawsuit against defendant Cree, Inc. ("Cree") alleging that defendant engaged in an "unfair and deceptive practice of . . . promising consumers" that Cree's light-emitting-diode bulbs (the "LED Bulbs") "will last for particularly long periods of time up to 35,000 hours" with a "100% Satisfaction Guarantee" and "yearly energy cost savings ranging from around $0.60 to $2 per blub per year" in violation of California's Unfair Competition Law ("UCL"), Cal. Bus. Prof. Code §§ 17200, et seq. (Count I); (False Advertising Law ("FAL"), Cal. Bus. Prof. Code §§ 17500, et seq. (Count II); Consumers Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750, et seq. (Count III);¹ fraudulent misrepresentation and concealment (Count V); negligent misrepresentation (Count VI); unjust enrichment (Count VII); breach of express and implied warranties (Count VIII);² and negligent failure to test (Count IX). (Dkt. No. 1, Class Action Compliant ("CAC").)

Now before the Court is defendant's motion to dismiss.³ (Dkt. No. 31, Motion to Dismiss ("MTD").) Having carefully considered the pleadings and fully-briefed motion, the hearing held on April 3, 2018, and for the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART defendant's motion as described below.

I. BACKGROUND

As relevant here, the complaint alleges as follows:

Defendant Cree "advertise[s], market[s], distribute[s], or s[ells]" LED Bulbs "to consumers throughout the United States." (CAC ¶ 12.) "[O]n or around April of 2015" Young purchased three of defendant's LED Bulbs at Walmart and paid "approximately $15-20 for each bulb." (Id. ¶ 32.) "Within months, all three [LED Bulbs] burned out even though [plaintiff] used them according to the instructions." (Id. ¶ 32.)

"Cree's packaging offers a '100% Satisfaction Guarantee' for LED Bulbs and an estimated lifetime of between 15-32 years depending on the product. The packages further offer an estimated yearly energy cost savings ranging from $0.60 to $2 per bulb per year. Cree packaging also offers a '10 Year Warranty.'" (Id. ¶¶ 3, 27.) Moreover, Cree's website "boast[s] . . . a 10 year 100% satisfaction guarantee." (Id. ¶ 4.) Plaintiff alleges that these "marketing efforts are made in order to—and do in fact—induce its customers to purchase the LED bulbs at a premium because consumers believe the Lightbulbs will last for far longer than their actual life." (Id. ¶ 5.) Based thereon, plaintiff asserts "Cree's claims regarding the longevity of the LED Lightbulbs are false." (Id. ¶ 6.)

II. LEGAL FRAMEWORK

A. Motion to Dismiss

Pursuant to Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief may be granted. Dismissal for failure to state a claim under Federal Rule of CivilProcedure 12(b)(6) is proper if there is a "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). The complaint must plead "enough facts to state a claim [for] relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face "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, 678 (2009). If the facts alleged do not support a reasonable inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79. Mere "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004). In ruling on a motion to dismiss, "the court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party." Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 984 (9th Cir. 2000).

Additionally, claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003). "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. Proc. 9(b). "Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). These requirements "ensure that allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985).

B. Preemption

Preemption is fundamentally a question of congressional intent. Wyeth v. Levine, 555 U.S. 555, 565 (2009). "Federal preemption occurs when: (1) Congress enacts a statute that explicitly pre-empts state law; (2) state law actually conflicts with federal law; or (3) federal lawoccupies a legislative field to such an extent that it is reasonable to conclude that Congress left no room for state regulation in that field." Chae v. SLM Corp., 593 F.3d 936, 941 (9th Cir. 2010) (internal quotation marks and citations omitted).

While the Court's interpretation of a preemption statute "must begin with its text," that interpretation "does not occur in a contextual vacuum." Medtronic, Inc. v. Lohr, 518 U.S. 470, 484-85 (1996); see Altria Group, Inc. v. Good, 555 U.S. 70, 76 (2008) (stating that, even "[i]f a federal law contains an express pre-emption clause, it does not immediately end the inquiry because the question of the substance and scope of Congress' displacement of state law still remains."). In analyzing the issue, a court must begin with the presumption that unless a "clear and manifest purpose of Congress" exists, federal acts should not supersede the historic police powers of the states. Wyeth, 555 U.S. at 565; Lohr, 518 U.S. at 485. "Parties seeking to invalidate a state law based on preemption 'bear the considerable burden of overcoming the starting presumption that Congress does not intend to supplant state law.'" Stengel v. Medtronic, 704 F.3d 1224, 1227-28 (9th Cir. 2013) (en banc) (quoting De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806, 814 (1997)).

Preemption is express where Congress has considered the issue of preemption and included in the enacted legislation a provision explicitly addressing that issue. Valentine v. NebuAd, Inc., 804 F. Supp. 2d 1022, 1028 (N.D. Cal. 2011) (citing Cipollone v. Liggett Group, 505 U.S. 504, 517 (1992)). In the absence of explicit preemptive language, congressional intent to preempt can be implied under two scenarios: field preemption and conflict preemption. First, field preemption occurs "where the scheme of federal regulation is 'so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.'" Valentine, 804 F. Supp. 2d at 1028 (quoting Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992)). Field preemption should not be found in the absence of persuasive reasons—either that the nature of the regulated subject matter permits no other conclusion, or that, without question, Congress has so ordained. Valentine, 804 F. Supp. 2d at 1028-29 (such preemption arises in only extraordinary circumstances). Second, conflict preemption arises when "compliance with both federal and state regulations is a physical impossibility." Id. (internal citations omitted).Conflict preemption may also exist where "state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Id. (internal citations omitted). Showing preemption by impossibility is a "demanding defense." Wyeth, 555 U.S. at 573.

C. Energy Policy and Conservation Act

The Energy Policy and Conservation Act (the "EPCA") establishes a national energy conservation program to reduce energy use in the United States by creating various requirements with regard to (i) energy efficiency, (ii) efficiency testing, (iii) operating costs, and (iv) labeling requirements. 42 U.S.C. §§ 6291-6309; see also S. Rep. No. 94-516, at 517 (1975), reprinted in 1975 U.S.C.C.A.N. 1956, 1957. Under the EPCA, LED bulb manufacturers must disclose certain information on their product packaging. 16 C.F.R. 305.15. The product's "principal display panel" must include the LED bulb's estimated annual energy cost, "expressed as 'Estimated Energy Cost' in dollars and based on usage of 3 hours per day and 11 cents ($0.11) per kWh." 16 C.F.R 305.15(b)(1). The package's "Lighting Facts" label must further include the estimated lifespan of each bulb. 16 C.F.R. 305.15(b)(3).

Illustrative examples of the required disclosures are depicted below:

Principal Display Panel

Image materials not available for display.

Lighting Facts Label

Image materials not available for display.

The EPCA provides that these required disclosures do not give rise to express or implied warranties. Specifically, Section 6297(g) of the EPCA provides:

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Any disclosure with respect to energy use, energy efficiency, or estimated annual operating cost which is required to be made under the provisions of this part shall not create an express or implied warranty under State or Federal law that such energy efficiency will be achieved or that such energy use or estimated annual operating cost will not be exceeded under conditions of actual use.

42 U.S.C. § 6297(g) ...