Citations
- 287 F. Supp. 3d 840
Full opinion text
EDWARD M. CHEN, United States District Judge
Plaintiffs allege that Defendant General Motors (GM) manufactured and sold a car engine that, due to several internal defects, consumes excessive amounts of oil, resulting in engine damage that presents a safety risk of sudden shutdowns or engine fires. GM moves to dismiss on several grounds which can broadly be grouped under challenges to personal jurisdiction for the out-of-state plaintiffs; failure to plead an unreasonable safety hazard or pre-sale knowledge that gives rise to a duty to disclose in support of the consumer protection and fraud claims; failure to adequately plead reliance on the omission; failure to allege the defect manifested during the implied warranty period; and various statute of limitations or pre-suit notice issues.
As explained below, Defendant's motion is GRANTED IN PART and DENIED IN PART .
I. FACTUAL AND PROCEDURAL HISTORY
Plaintiffs allege that the Gen IV Vortec 5300 engine suffers from an "inherent" "Oil Consumption Defect." SAC ¶ 7. The engine was installed in each of the Class Vehicles: the 2010-2014 Chevrolet Avalanche; 2010-2012 Chevrolet Colorado; 2010-2013 Chevrolet Express; 2010-2013 Chevrolet Silverado; 2010-2014 Chevrolet Suburban; 2010-2014 Chevrolet Tahoe; 2010-2013 GMC Canyon; 2010-2013 GMC Savana; 2010-2013 GMC Sierra; 2010-2014 GMC Yukon; and the 2010-2014 GMC Yukon XL. Id. ¶ 2.
Plaintiffs identify five defects that "contribute" to the overall "Oil Consumption Defect." First, the "primary cause" are "piston rings ... [that] do not maintain sufficient tension to keep oil in the crankcase." SAC ¶ 8. Second, the Active Fuel Management (AFM) system "contributes" to the defect by "spraying oil directly at the piston skirts," which "overloads and fouls the defective piston rings, triggering oil migration past the rings." SAC ¶ 9. Third, the PCV system "vacuums oil from the valvetrain into the intake system, where it is ultimately burned in the combustion chambers" contributing to excessive oil combustion. SAC ¶ 10. Fourth, the defective "Oil Life Monitoring System" does not monitor oil level, but rather, engine conditions like revolutions and temperature to predict oil quality. SAC ¶ 11. Because it does not take oil level into account, the system "directs drivers to travel thousands of miles with inadequate engine lubricity levels, wearing out and damaging moving internal engine components." Id. Fifth, the oil pressure gauge "does not provide any indication as to when the oil pressure ... falls to levels low enough to damage internally lubricated parts or cause engine failure" and the oil canister symbol does not illuminate "until well past the time when the Class Vehicles are critically oil starved." SAC ¶ 13.
Plaintiffs also discuss the impact of the alleged defect on their own vehicles and on other consumers. The nature of these allegations is discussed in detail in the relevant sections below.
The chart below identifies each named plaintiff, the state of purchase, the date of purchase, and the vehicle purchased.
Chart of Named Plaintiffs in SAC
Name State of Car Date of Purchase Purchase Raul Siqueiros California 2011 Chevrolet Silverado N/A Joseph Brannan Alabama 2010 GMC Yukon 2011 Larry Goodwin Arkansas 2011 Chevrolet Silverado 2010 Marc Perkins Delaware 2011 Chevrolet Avalanche 2011 Donald Ludington Florida 2010 Chevrolet Tahoe 2012 Thomas Shorter Florida 2011 Chevrolet Silverado N/A Derick Bradford Georgia 2010 Chevrolet Silverado 2014 Gabriel Del Valle Idaho 2013 Chevrolet Avalanche 2/2016 Kevin Hanneken Illinois 2011 GMC Sierra 1500 2011 Dan Madson Kansas 2013 Chevrolet Silverado 12/2013 James Faulkner Kentucky 2011 GMC Sierra 2015 Joseph Olivier Louisiana 2013 GMC Sierra N/A Scott Smith Massachusetts 2011 GMC Yukon 2012 Ross Dahl Minnesota 2010 Chevrolet Silverado 2010 Drew Peterson Minnesota 2013 Chevrolet Silverado 12/2012 Michael Ware Mississippi 2013 Chevrolet Silverado 2016 Steve Kitchen Missouri 2013 Chevrolet Silverado 07/2013 Barbara Molina New Mexico 2012 Chevrolet Avalanche N/A Steven Ehrke North Carolina 2013 Chevrolet Silverado 2/2016 Thomas Gulling Ohio 2013 Chevrolet Silverado N/A Ronald Jones Ohio 2013 Chevrolet Silverado N/A Mike Warpinski Oklahoma 2012 Chevrolet Express 2014 John Graziano Pennsylvania 2012 Chevrolet Silverado 12/2011 Monteville Sloan California 2013 Chevrolet Silverado 08/2014 Joshua Byrge Tennessee 2012 Chevrolet Silverado 2016 Rudy Sanchez Texas 2013 Chevrolet Silverado 07/2013 Christopher Thacker Virginia 2010 Chevrolet Silverado 06/2014 Randy Clausen Washington 2012 Chevrolet Suburban 2013 James Robertson West Virginia 2010 GMC Sierra 1500 2010 Jonas Bednarek Wisconsin 2010 Chevrolet Suburban 2010 Todd & Jill Cralley California 2010 Chevrolet Suburban N/A Edwin & Katelyn Doepel Illinois 2013 GMC Yukon N/A Dennis Vita New York 2013 GMC Sierra N/A William Martel Oregon 2011 Chevrolet Silverado 2011 Kelly Harris N/A (Received 2012 Chevrolet Silverado 2012 from employer)
II. LEGAL STANDARD
In considering a Rule 12(b)(6) motion to dismiss, a court must take all allegations of fact as true and construe them in the light most favorable to the nonmoving party, although "conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). While "a complaint need not contain detailed factual allegations ... it must plead 'enough facts to state a claim to relief that is plausible on its face.' " Id. "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 (2009) ; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Id.
Claims sounding in fraud or mistake are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b) ; see Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (holding that nondisclosure claims sound in fraud and are subject to Rule 9(b) ). To satisfy the heightened standard under Rule 9(b), the allegations must be "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). The plaintiff must set forth "what is false or misleading about a statement, and why it is false." In re Glenfed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir.1994) (en banc), superseded by statute on other grounds as stated in Ronconi v. Larkin, 253 F.3d 423, 429 n. 6 (9th Cir. 2001).
III. DISCUSSION
Defendant raises numerous challenges to Plaintiffs' Second Amended Complaint ("SAC"), including whether:
• there is personal jurisdiction for the out-of-state plaintiffs;
• the fraud and consumer protection claims have been adequately pleaded;
• the implied warranty claims fail for failure to allege the vehicles were unfit for use; and
• various statute of limitations or pre-suit notice procedural challenges bar Plaintiffs' implied warranty, unjust enrichment, and consumer protection claims.
Each challenge is analyzed below.
A. Personal Jurisdiction
Defendant argues that Bristol-Myers Squibb Co. v. Sup. Ct. of Cal. , --- U.S. ----, 137 S.Ct. 1773, 198 L.Ed.2d 395 (2017), requires dismissal for lack of personal jurisdiction of all claims by non-California named plaintiffs who did not purchase their cars in California. Plaintiffs argue this challenge has been waived because Defendant made general appearances and did not object to personal jurisdiction in a timely fashion. Defendant filed its first motion to dismiss on April 10, 2017, Docket No. 47, but the hearing was held on July 5, 2017, Docket No. 60, after the Supreme Court decided Bristol-Myers on June 19, 2017. Defendant counters that there was no waiver, and, even if there were, it would not apply to the new plaintiffs who were added only to the Second Amended Complaint and for whom this motion is the first opportunity to challenge personal jurisdiction. The Court requested, and the parties have filed, supplemental briefing. See Docket Nos. 87 and 88.
As explained below, Defendant failed to raise its challenge to personal jurisdiction at the first available opportunity with respect to 27 non-California plaintiffs. However, this is Defendant's first opportunity to challenge personal jurisdiction with respect to five named plaintiffs who were added to the case in the Second Amended Complaint: the Doepels (Illinois), Vita (New York), Martell (Oregon), and Harris (Washington).
1. Waiver of Challenge to Personal Jurisdiction as to Original Plaintiffs Already in Case
Rule 12 permits a party to request dismissal on the basis that a court lacks personal jurisdiction. See Rule 12(b)(2). However, that defense is "waive[d]" if a party "fail[s] to ... (i) make it by motion under this rule; or (ii) include it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course." Fed. R. Civ. P. 12(h)(1). This "strict waiver rule" "extends only to defenses 'then available.' " Glater v. Eli Lilly & Co. , 712 F.2d 735, 738 (1983) (quoting Fed. R. Civ. P. 12(g) ). To show a defense was not previously available, a defendant must demonstrate that it "would have been directly contrary to controlling precedent in this Circuit." Gucci Am., Inc. v. Weixing Li , 768 F.3d 122, 135-36 (2d Cir. 2014).
Defendant did not challenge personal jurisdiction over the claims of the original Plaintiffs at the first opportunity. Though the issue had been percolating (the appeal of Bristol-Myers to the U.S. Supreme Court was already pending), Defendant failed to challenge personal jurisdiction over those Plaintiffs. Then, Bristol-Myers was decided approximately two weeks before the hearing on Defendant's first motion to dismiss. Defendant could have filed a notice of supplemental authority or could have requested leave from the Court to submit supplemental briefing, but it failed to do so. Moreover, Defendant did not object to personal jurisdiction at the hearing on its motion. Accordingly, the argument was waived.
Defendant has not shown that the exception for an argument previously "unavailable" applies here. Contrary to Defendant's contention, Bristol-Myers did not reverse any Ninth Circuit precedent foreclosing Defendant's challenge. Indeed, the Supreme Court expressly stated that its decision did not inaugurate a change in law. See Bristol-Myers , 137 S.Ct. at 1781 ("Our settled principles ... control this case."); id. at 1783 ("Our straightforward application in this case of settled principles of personal jurisdiction will not result in the parade of horribles that respondents conjure up."). Further, the Supreme Court limited its holding and expressly stated that the very question raised by Defendant's challenge here was not addressed in Bristol-Myers . Id. at 1783-84 ("[S]ince our decision concerns the due process limits on the exercise of specific jurisdiction by a State , we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court." (emphasis added) ).
Moreover, Defendant has not identified a single Ninth Circuit case overturned by Bristol-Myers . See Alvarez v. Nbty, Inc. , 2017 WL 6059159, at *4, n.2 (S.D. Cal. Dec. 6, 2017) (holding that personal jurisdiction defense was previously available because Bristol-Myers did not overturn controlling precedent). Nor has Defendant identified controlling precedent in the Ninth Circuit directly precluding its jurisdictional argument. Rather, Defendant's sole argument is that the Supreme Court reversed the California Supreme Court and Defendant should not have been expected to take a position contrary to that court. This argument is unpersuasive for two reasons.
First, the California Supreme Court's decision in Bristol-Myers did not control Defendant's available defenses. Though a federal court looks to the long-arm statute of the state in which it resides to determine whether it may exercise personal jurisdiction over an out-of-state defendant, California law permits the exercise of personal jurisdiction to the maximum extent permitted under the U.S. constitution's due process clause. See Cal. Civ. Proc. Code § 410.10. Thus, the outer boundaries of California personal jurisdiction (and therefore this Court's) concerned a federal question over which the Ninth Circuit and U.S. Supreme Court had ultimate authority, not a question of state law over which the California Supreme Court's decisions controlled. The California Supreme Court's decision did not constitute controlling Ninth Circuit authority.
Second, the California Supreme Court's opinion was sharply divided in a four-three vote with a published dissent, see Bristol-Myers Squibb Co. v. Sup. Ct. , 1 Cal.5th 783, 206 Cal.Rptr.3d 636, 377 P.3d 874 (2016), and the U.S. Supreme Court granted certiorari on January 19, 2017, see --- U.S. ----, 137 S.Ct. 827, 196 L.Ed.2d 610 (2017). Thus, it is not credible to suggest that by the time Defendant filed its first motion to dismiss four months later on April 10, 2017, see Docket No. 47, it felt so constrained by the California Supreme Court's divided opinion that it could not have been expected to raise or at the very least preserve a personal jurisdiction challenge in this case. And even to the extent Defendant felt constrained by the California Supreme Court, that does not explain why Defendant did not take advantage of a two-week window between Bristol-Myers and the hearing on its first motion to dismiss to notify the Court it intended to challenge personal jurisdiction.
Finally, Defendant has argued that the waiver of personal jurisdiction is discretionary. The Court is not persuaded. Rule 12's language is mandatory, not discretionary. See Fed. R. Civ. P. 12(g)(2) (a party making a motion "must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion" (emphasis added) ); Fed. R. Civ. P. 12(h)(1) ("A party waives any defense listed in Rule 12(b)(2)-(5) by: (A) omitting it from a motion in the circumstances described in Rule 12(g)(2)...." (emphasis added) ). Defendant cites only one case to support this contention, Greene v. Mizuho Bank, Ltd. , 289 F.Supp.3d 870, 2017 WL 7410565, 2017 U.S. Dist. LEXIS 202802 (D. Ill. Dec. 11, 2017), but Greene is distinguishable. There, the defendant filed a motion to dismiss for lack of personal jurisdiction before the Supreme Court's decision in Bristol-Myers , and sought reconsideration afterwards. In those circumstances, the court excused the fact that Defendant's initial personal jurisdiction challenge was based on a different theory and explained that it "retain[ed] the independent power to identify and apply the proper construction of governing law, even where the parties fail to advert to the applicable rule in their own briefing." Id. at 876-77, 2017 WL 7410565 at *6, 2017 U.S. Dist. LEXIS 202802 at *18 (quotations, citations, and alterations omitted). Importantly, there had been no waiver because the defendant had actually challenged personal jurisdiction before Bristol-Myers. In contrast, here, Defendant did not attempt to challenge personal jurisdiction prior to the present motion.
Even if the Court could exercise its discretion to excuse the waiver, however, such an excuse would be unwarranted. Defendant has not explained why it could not have alerted the Court to its intention to challenge personal jurisdiction at the hearing on its initial motion to dismiss. Moreover, the purpose of Rule 12(g)'s requirement that all challenges be presented in a single motion to dismiss is "to eliminate unnecessary delay at the pleading stage." Fed. Prac. & Proc. § 1384 (3d ed.). By failing to notify the Court that it intended to challenge personal jurisdiction at that initial hearing, Defendant forced the court to adjudicate plaintiffs' claims on the merits before considering a potentially dispositive threshold issue.
Because Defendant's challenge to personal jurisdiction with respect to the original named plaintiffs was not raised at the first available opportunity. Defendant's jurisdictional challenge to these Plaintiffs has been waived.
2. The Court Has Personal Jurisdiction Over the New Out-of-State Named Plaintiffs' Claims
Nevertheless, this motion is Defendant's first opportunity to challenge personal jurisdiction with respect to the plaintiffs newly named in the SAC, so that challenge must be considered on the merits. This challenge applies to Plaintiffs Mr. and Mrs. Doepel (Illinois), Plaintiff Vita (New York), Plaintiff Martell (Oregon), and Plaintiff Harris (Washington). Their claims only involve two new states (New York and Oregon) because Plaintiffs Hanneken and Clausen, with respect to whom the personal jurisdiction challenge has been waived, also bring claims under Illinois and Washington law, respectively.
Whether the Court may assert specific jurisdiction over a nonresident defendant "focuses on the relationship among the defendant, the forum, and the litigation." Axiom Foods, Inc. v. Acerchem Int'l, Inc. , 874 F.3d 1064, 1068 (9th Cir. 2017) (quotation and citation omitted). "[T]he defendant's suit-related conduct must create a substantial connection with the forum State." Id. (quotation and citation omitted). Three requirements must be met: "(1) the defendant must either purposefully direct his activities toward the forum or purposefully avail himself of the privileges of conducting activities in the forum; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable." Id. (quotation and citations omitted).
a. The Supreme Court's Holding in Bristol-Myers
Defendant challenges personal jurisdiction on the basis of Bristol-Myers , which relates to the second prong, whether "the claim ... arises out of or relates to the defendant's forum-related activities." Id. In Bristol-Myers , plaintiffs from around the country sued Bristol-Myers Squibb Company (BMS) in California state court, alleging that its drug Plavix damaged their health and violated, inter alia , California products liability, negligent misrepresentation, and misleading advertising laws. BMS itself was an out-of-state defendant, incorporated in Delaware and headquartered in New York. It sold Plavix in California and engaged in other business activities there, but it "did not develop Plavix in California, did not create a marketing strategy for Plavix in California, and did not manufacture, label, package, or work on the regulatory approval of the product in California." 137 S.Ct. at 1778. The California Supreme Court had nevertheless reasoned that the exercise of specific jurisdiction over the out-of-state plaintiffs' claims was reasonable under its "sliding scale approach to specific jurisdiction" under which "the more wide ranging the defendant's forum contacts, the more readily is shown a connection between the forum contacts and the claim" because the claims by all plaintiffs were "based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product." Id. at 1779 (quotations and citations omitted).
The U.S. Supreme Court disagreed. That Court emphasized that the interests to be considered in determining whether personal jurisdiction exists include "the interests of the forum State and of the plaintiff in proceeding with the cause in the plaintiff's forum of choice," but that the "primary concern is the burden on the defendant." Id. at 1780 (quotations and citations omitted). This analysis "obviously requires a court to consider the practical problems resulting from litigating in the forum, but it also encompasses the more abstract matter of submitting to the coercive power of a State that may have little legitimate interest in the claims in question." Id. As the Supreme Court explained, the principle of personal jurisdiction is in part "a consequence of territorial limitations on the power of the respective States," as "[t]he sovereignty of each State ... implie[s] a limitation on the sovereignty of all its sister states." Id. at 1780 (citations and quotations omitted). These federalism concerns underpinned Bristol-Myers .
Because of these significant interstate federalism concerns, the Supreme Court rejected the notion that mere factual or legal similarity between the California plaintiffs' claims and the non-resident plaintiffs' claims somehow sufficed to create personal jurisdiction. "The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California-and allegedly sustained the same injuries as did the nonresidents-does not allow the State to assert specific jurisdiction over the nonresidents' claims." Bristol-Myers , 137 S.Ct. at 1781. Rather, "[w]hat is needed ... is a connection between the forum and the specific claims at issue." Id. The plaintiffs could not demonstrate such a connection with respect to the out-of-state plaintiffs because defendant had not done anything related to their claims in California. Accordingly, the Supreme Court held that California state courts lacked specific personal jurisdiction over out-of-state defendants for claims brought by out-of-state plaintiffs, where there were no sufficient contacts between defendants' conduct in connection with those claims and the forum state, California. 137 S.Ct. at 1782-83. This conclusion was driven by the limitations of state sovereignty. Indeed, before analyzing the lack of a connection between California and the nonresident plaintiffs' claims, the Supreme Court emphasized that "at times, [the] federalism interest may be decisive" in the personal jurisdiction analysis. Id. at 1780 (quotation omitted). It noted that, "[e]ven if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism , may sometimes act to divest the State of its power to render a valid judgment." Id. at 1780-81 (quoting World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 293, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (alteration in original, emphasis added) ).
b. Defendant's Challenge Under Bristol-Myers
Defendant contends that Bristol-Myers applies in a straight-forward manner to this case because the out-of-state plaintiffs cannot allege any act in California that touches on their claims. Plaintiffs do not allege, for example, that the defective vehicles were designed or manufactured in California, that the decision not to disclose the defect was made in California, or that marketing materials omitting the defect and used nationwide were designed in or promulgated from California to their states. Compare Bristol-Myers Squibb , 137 S.Ct. at 1778 (noting that "[defendant] did not develop Plavix in California, did not create a marketing strategy for Plavix in California, and did not manufacture, label, package, or work on the regulatory approval of the product in California").
The Court agrees, and Plaintiffs appear to concede, that the out-of-state plaintiffs have not shown an independent relationship between their claims under the laws of Illinois, New York, Washington, and Oregon, and Defendant's contacts with the State of California which could satisfy Bristol-Myers . Plaintiffs argue, however, that Bristol-Myers does not apply to federal courts and that despite the lack of an independent connection between the out-of-state claims and Defendant's California contacts, the Court may exercise its discretion under the circumstances here to apply the doctrine of "pendent personal jurisdiction," citing Action Embroidery Corp. v. Atl. Embroidery, Inc. , 368 F.3d 1174 (9th Cir. 2004).
The Court will first address the question whether Bristol-Myers applies straightforwardly to federal courts and second whether the doctrine of pendent personal jurisdiction permits the out-of-state Plaintiffs' claims to be heard in this Court, at least under the particular facts of the instant case.
i. Does Bristol-Myers Apply to Federal Courts?
Bristol-Myers expressly left open the question whether its holding extended to federal courts. Id. at 1783-84. The Court is not persuaded that such a categorical extension is warranted. Bristol-Myers was animated by unique interstate federalism concerns. Indeed, the Supreme Court emphasized that, when analyzing the power of a state court to exercise personal jurisdiction, the inquiry regarding the prospective burden on an out-of-state defendant "encompasses the more abstract matter of submitting [the defendant] to the coercive power of a State that may have little legitimate interest in the claims in question." Id. at 1790. It noted that in certain cases this interest could be "decisive," irrespective of whether the exercise of jurisdiction by the state imposes a burden on the defendant. Id. at 1780-81 (quotation omitted). Thus, the Supreme Court's analysis in Bristol-Myers must be understood through the lens of those interstate federalism concerns, which the Court incorporated into its due process analysis.
As the Supreme Court has previously explained:
[i]t is true that we have stated that the requirement of personal jurisdiction, as applied to state courts, reflects an element of federalism and the character of state sovereignty vis-à-vis other States. [...] The restriction on state sovereignty power ... however, must be seen as ultimately a function of the individual liberty interest preserved by the Due Process Clause. That Clause is the only source of the personal jurisdiction requirement and the Clause itself makes no mention of federalism concerns.
Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702, n. 10, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982) (citations omitted). This passage make clear that the due process analysis encompasses the question of state sovereignty, but also that the due process analysis differs fundamentally when a case is pending in federal court and no such concerns are raised. Id. (discussing "the requirement of personal jurisdiction, as applied to state courts ") (emphasis added).
In Bristol-Myers , the Supreme Court did not address the question of whether BMS would face any undue burden in California court; rather, the Court's analysis focused exclusively on the unfairness of submitting BMS to the jurisdiction to a foreign sovereign (California) with respect to claims having no independent connection to that sovereign. Bristol-Myers , 137 S.Ct. at 1780. The focus of the Court's analysis, as well as its preface that interstate sovereignty concerns may be "decisive" even when a defendant faces no burden, id. at 1780-81, provide the backdrop against which Bristol-Myers ' import must be understood.
In contrast to Bristol-Myers , the due process right does not obtain here in the same manner because all federal courts, regardless of where they sit, represent the same federal sovereign, not the sovereignty of a foreign state government. There is no risk of a state court exceeding the bounds of its state's sovereignty and subjecting residents of another state to the coercing power of its courts. Therefore, where a federal court presides over litigation involving a federal question, the due process analysis does not incorporate the interstate sovereignty concerns that animated Bristol-Myers and which may be "decisive" in a state court's analysis. Id. Without those interstate federalism concerns, the due process analysis falls back on whether "the maintenance of the suit ... offend[s] 'traditional notions of fair play and substantial justice,' " Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (citation omitted), which itself focuses on the burden on the defendant (other than a concern about subjecting it to the power of a foreign sovereign).
The Court thus returns to the traditional three-part test summarized above: "(1) the defendant must either purposefully direct his activities toward the forum or purposefully avail himself of the privileges of conducting activities in the forum; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable." Axiom Foods , 874 F.3d at 1068 (quotation and citations omitted).
Here it is undisputed that GM has availed itself of the privilege of conducting business in the state of California, so the first prong is not at issue. The Court will therefore proceed to analyze the second and third prongs below.
ii. Do the Nonresident Plaintiffs' Claims Arise Out of GM's Suit-related Contacts?
Plaintiffs concede that the out-of-state plaintiffs cannot demonstrate an independent connection between their claims and Defendant's contacts with California. Instead, they rely on the doctrine of "pendent personal jurisdiction," as elaborated by the Ninth Circuit in Action Embroidery . See 368 F.3d 1174. In Action Embroidery , the district court had dismissed the plaintiffs' California Cartwright Act claims against out-of-state defendants in the absence of any related contacts with California. The plaintiffs' federal Sherman Act claims were permitted to proceed because that statute creates nationwide personal jurisdiction by virtue of permitting nationwide service of process. See 15 U.S.C. § 22. On appeal, the Ninth Circuit reversed. It re-affirmed the principle that "[p]ersonal jurisdiction must exist for each claim asserted against a defendant," and recognized that California's long-arm statute "would not allow the exercise of personal jurisdiction over the[ ] state-law claims if they were standing alone." Id. However, the Ninth Circuit observed that several other circuits had adopted the doctrine of "pendent personal jurisdiction" in which "a court may assert pendent personal jurisdiction over a defendant with respect to a claim for which there is no independent basis of personal jurisdiction so long as it arises out of a common nucleus of operative facts with a claim in the same suit over which the court does have personal jurisdiction." Id. Adopting the doctrine, the Ninth Circuit held that "[w]hen a defendant must appear in a forum to defend against one claim, it is often reasonable to compel that defendant to answer other claims in the same suit arising out of a common nucleus of operative facts." Id. at 1181. It found that "judicial economy, avoidance of piecemeal litigation, and overall convenience of the parties is best served by adopting this doctrine." Id. Whether to exercise pendent personal jurisdiction is afforded to the discretion of the district court. Id. In essence, Action Embroidery holds that a claim that itself lacks an independent connection to the federal forum nevertheless may have a sufficient nexus for purposes of the personal jurisdiction analysis if it arises out of a common nucleus of operative facts with other claims properly before the court.
To be sure, the relationship between the claims at issue in Action Embroidery and the forum state were arguably closer than those at issue here because the same plaintiffs already before the court asserted them in Action Embroidery . In contrast, here, the out-of-state plaintiffs ask the Court to exercise pendent personal jurisdiction over their claims based on its jurisdiction over the California plaintiffs' claims-a situation analogous to Bristol-Myers . Although the Court is mindful of these factual dissimilarities, the Ninth Circuit did not limit its holding in Action Embroidery to situations involving the same parties. Rather, it focused on whether the new claims arose out of the same nucleus of operative facts, not whether the claims belonged to the same plaintiffs. See Action Embroidery , 368 F.3d at 1181 ("[w]hen a defendant must appear in a forum to defend against one claim, it is often reasonable to compel that defendant to answer other claims in the same suit arising out of a common nucleus of operative facts" (emphasis added) ); see also id. ("a court may assert pendent personal jurisdiction over a defendant with respect to a claim for which there is no independent basis of personal jurisdiction so long as it arises out of a common nucleus of operative facts with a claim in the same suit over which the court does have personal jurisdiction" (emphasis added) ). Thus, the Ninth Circuit has not limited the doctrine of pendent personal jurisdiction to when a relationship is shown to "other claims by the same plaintiff " but rather to "other claims in the same suit ," id. (emphasis added).
Despite the broad language of Action Embroidery , it may be argued that the nexus between the claims in suit and the forum state are typically more attenuated where a different non-resident plaintiff asserts the new claims than when the same resident plaintiff asserts new claims. Applying pendent personal jurisdiction to such a plaintiff's claims therefore constitutes a factual extension of Action Embroidery ; the calculus may differ, particularly in light of Bristol-Myers ' holding that a common nucleus of operative facts was not in and of itself sufficient to justify the exercise of a state court's sovereign power over an out-of-state defendant. Thus, it is by no means clear whether Action Embroidery 's pendent personal jurisdiction doctrine extends categorically to claims brought by different plaintiffs. However, there are several case-specific factors that weigh in favor of finding a requisite nexus and hence personal jurisdiction here.
First, this is a putative nationwide class action. The Court may well have jurisdiction over absent class members (including the named out-of-state plaintiffs) who are non-forum residents in any event. See , e.g. , Fitzhenry-Russell v. Dr. Pepper Snapple Grp., Inc. , 2017 WL 4224723 (N.D. Cal. Sep. 22, 2017) (rejecting the argument that Bristol-Myers precludes a court from exercising personal jurisdiction over the claims of absent class members who are out-of-state); In re Chinese-Manufactured Drywall Prods. Liability Litig. , 2017 WL 5971622, at *12-13 (E.D. La. Nov. 30, 2017) (same); cf. Swamy v. Title Source, Inc. , Case No. 17-01175 WHA, 2017 WL 5196780 (N.D. Cal. Nov. 10, 2017) (rejecting the argument that Bristol-Myers precludes a court from exercising personal jurisdiction over the claims of out-of-state opt-in plaintiffs in a collective action proceeding under the Fair Labor Standards Act). They are not strangers to this litigation.
Second, as discussed in more detail in the following section, the exercise of personal jurisdiction over the non-resident Plaintiffs' claims in this case will impose only a de minimis burden on GM. Because the Court has found a waiver of personal jurisdiction with respect to the non-California plaintiffs previously named in this suit, the Court's application of the pendent personal jurisdiction doctrine permits inclusion of only 5 additional Plaintiffs asserting claims under the laws of 2 additional states to this litigation. Those new claims overlap substantially with the claims (including federal claims) already before this Court, arising out of the same nucleus of operative facts.
Third, if the Court were to decline to exercise jurisdiction, GM would face piecemeal litigation and would have to defend itself in several different courts on nearly identical issues. Because the claims at issue arise out of the same nucleus of operative facts, the adjudication of facts in those disparate proceedings would be likely to overlap and possibly to conflict with proceedings in this case.
These factors weigh in favor of applying the doctrine of pendent personal jurisdiction as explicated in Action Embroidery to the non-resident plaintiffs in this case. The Court is satisfied that under Action Embroidery and the absence of interstate sovereignty concerns present in Bristol-Myers , there is a sufficient nexus between the claims of the 5 out-of-state plaintiffs and GM's contacts with California over which this Court has jurisdiction.
iii. Is the Exercise of Jurisdiction Reasonable and Does It Comport With Fair Play and Substantial Justice?
This does not end the inquiry. The Court still must consider the third factor of the traditional test for specific personal jurisdiction which focuses on whether the exercise of jurisdiction is reasonable and comports with fair play and substantial justice. See Axiom Foods , 874 F.3d at 1068 ; Int'l Shoe , 326 U.S. at 316, 66 S.Ct. 154 ; Bristol-Myers , 137 S.Ct. at 1780 (noting that "the primary concern" continues to be "the burden on the defendant"); Action Embroidery , 368 F.3d at 1181 (focusing on whether it is "reasonable to compel [the] defendant to answer other claims in the same suit arising out of a common nucleus of operative facts). This focuses principally on the burden on the defendant.
At the hearing, the Court asked GM to identify what prejudice it would suffer if it were required to litigate the out-of-state plaintiffs' claims in this Court. GM stated that it could not credibly suggest that it lacked resources to litigate in this district, but noted that a federal court sitting in Florida, for example, might be more familiar with Florida law than a federal court sitting in California. Though that may be the case, it is not clear how that translates into a burden, let alone an unreasonable one. In any case, the argument is unpersuasive because federal courts are frequently called upon to interpret the laws of the several States. See , e.g. , Rabinowitz v. Samsung Electronics Am., Inc. , Case No. 14-cv-00801-JCS, 2014 WL 5422576, at *7 (N.D. Cal. Oct. 10, 2014) (explaining that "federal courts have an equal ability to address claims arising out of state law" and "[d]istrict courts regularly apply the law of states other than the forum state" (citations and quotations omitted) ). Furthermore, GM's argument is undercut by its own proposal that the Court transfer the claims of the out-of-state and California plaintiffs to a single court, the Eastern District of Michigan, which would similarly be called upon to apply non-Michigan state law. See Docket No. 90 at 10-12. Defendant therefore has not identified a legitimate burden.
Further, the Court is hard-pressed to find any unreasonable burden on the facts of this case. As discussed above, because the Court already has jurisdiction over the 5 California plaintiffs' claims and those of 27 nonresident plaintiffs, the sole question here is whether it would be unreasonably burdensome on Defendant for this Court to also exercise personal jurisdiction over the claims of 5 new plaintiffs, which introduce claims under only 2 additional states'
laws (New York and Oregon). That burden is de minimis, particularly because the alternative would be for those plaintiffs to file new, separate cases under their states' laws. Moreover, GM has not explained how it would be less burdensome to answer to those plaintiffs' claims in New York, Washington, Oregon, and Illinois rather than San Francisco, as those plaintiffs would likely be able to exercise personal jurisdiction over GM in their home states.
In addition, the overarching circumstances meriting the exercise of pendent personal jurisdiction-"judicial economy, avoidance of piecemeal litigation, and overall convenience of the parties," Action Embroidery , at 1181 -counsel in favor of jurisdiction. Judicial economy is better served by having the claims of all plaintiffs heard in this Court where they involve similar legal issues and all arise out of a common nucleus of operative facts relating principally to whether GM's engine was defective, whether the defect was material or posed an unreasonable safety risk, and when GM became aware of the defect. The alternative to hearing those claims in a single forum is to populate the dockets of up to fifty federal courts with nearly identical legal and factual issues. Additionally, there is an interest in avoiding piecemeal litigation, particularly since Plaintiffs request injunctive relief and certification of a nationwide class. Having the same question proceed in different courts creates the possibility of overlapping nationwide classes, inconsistent outcomes, cf. Fed. R. Civ. P. 23(b)(2), and an obvious waste of judicial resources. Finally, the overall convenience of the parties-including Defendant's-is much better served by having the claims heard in a single forum rather than fifty.
In sum, under the particular facts of this case, all three prongs of the test for specific personal jurisdiction have been satisfied here. See Axiom Foods , 874 F.3d at 1068. It is undisputed that GM has availed itself of the privileges of conducting business in California, satisfying the first prong. In the absence of any particular federalism concerns, there is a sufficient nexus between the additional non-California claims and GM's contacts with California to satisfy the second prong. The exercise of personal jurisdiction over the 5 new out-of-state plaintiffs' claims would not offend fair play or substantial justice, satisfying the third prong. Moreover, all factors that inform the due process analysis are present here: judicial economy, the avoidance of piecemeal litigation, the overall convenience of the parties, and the minimal additional burden on Defendant all counsel strongly in favor of exercising pendent personal jurisdiction over the 5 new plaintiffs' claims under the facts of this case.
B. Fraud and Consumer Protection Claims
Plaintiffs bring fraud and consumer protection claims under the laws of several states alleging Defendant unlawfully failed to disclose the excessive oil consumption defect to consumers. Defendant's motion to dismiss is argued pursuant to California law on the basis that it is the most developed. Because the parties have focused on California law and Defendant has not argued that the laws of any other state would preclude a claim viable under California law, the Court's analysis also focuses on California authorities.
Plaintiffs' California claims are brought pursuant to the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750, et seq. , the Unfair Competition Law ("UCL"), Cal. Bus. & Profs. Code §§ 17200, et seq , and under the common law for fraudulent omission or concealment. The CLRA forbids "unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer." Cal. Civ. Code § 1770(a). The UCL prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Profs. Code § 17200.
A common law fraudulent omission claim requires demonstrating that:
(1) the defendant must have concealed or suppressed a material fact,
(2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.
Hahn v. Mirda , 147 Cal.App.4th 740, 748, 54 Cal.Rptr.3d 527 (2007) (quotation and citation omitted).
1. Duty to Disclose
The first question is whether Defendant had a duty to disclose. See Falk v. Gen. Motors Corp. , 496 F.Supp.2d 1088, 1094 (N.D. Cal. 2007). That duty may arise "(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material fact." Id. (quoting LiMandri v. Judkins , 52 Cal.App.4th 326, 337, 60 Cal.Rptr.2d 539 (1997) ).
Plaintiffs argue that GM had a duty to disclose the defect based on the second and third prongs: i.e. , that GM either had a duty to disclose because it had exclusive knowledge of the defect (a material fact), or because it actively concealed that fact from Plaintiffs. GM disputes both of these points. The Court first analyzes whether Plaintiffs adequately plead that GM had pre-sale knowledge of the defect and that the defect was material. As to whether Defendant had exclusive knowledge of the defect (assuming pre-sale knowledge is established) and whether Plaintiff knew of the material facts, those facts are not disputed. As to whether Defendant actively concealed a material fact, that is discussed below in connection with fraudulent concealment, see infra at 888-89.
2. Pre-Sale Knowledge of Defect
To be liable for a failure to disclose, a defendant must have pre-sale knowledge of the defect. The Court previously concluded Plaintiffs had failed to plead such pre-sale knowledge for four reasons. First, the mere fact that GM subsequently re-designed its engine was not probative where the whole engine was re-designed, rather than just the allegedly defective low-tension oil rings. Docket No. 62 at 11. Second, the Court found 81 consumer complaints to the National Highway Traffic Safety Administration ("NHTSA") and consumer forums did not demonstrate knowledge because they did not explicitly state that the cause of the oil consumption was the Low-Tension Oil Ring Defect, and a majority of the complaints were posted in 2014 or later, after the marketing and sale of the 2010-2013 Class Vehicles. Id. at 12. Third, Plaintiffs failed to allege that 81 complaints posted over the course of 7 years was an unusually high number. Id. at 13. Fourth, the single Technical Safety Bulletin ("TSB") identified by Plaintiffs did not show knowledge of a low-tension oil ring defect (the sole defect previously alleged by Plaintiffs) where it explicitly identified other causes for the excessive oil consumption (the AFM and PCV systems). Id.
However, in the SAC, Plaintiffs have broadened their allegations concerning the nature of the defect. They no longer allege that the low-tension oil ring defect was the sole problem that caused excessive oil consumption. Rather, they allege an "Oil Consumption Defect" to which there were several contributing factors, including defective piston rings, a defective AFM system, a defective PVC system, and defective oil warning lights/pressure gauges. In addition to this broader definition, Plaintiffs have bolstered the complaint with additional consumer complaints and other allegations Plaintiffs contend support an inference of pre-sale knowledge.
The revised allegations alter the analysis. Most compellingly, Plaintiffs allege that Defendant issued two TSBs specifically related to two of the components they allege contributed to the overconsumption defect: the AFM and PCV systems. With respect to the AFM system, GM issued a TSB in August 2010 that "acknowledged that the AFM system's oil pressure relief valve contributed to oil consumption and carbon buildup on the piston rings." SAC ¶ 227. With respect to the PCV system, GM issued a TSB in March 2011 that "acknowledged [the] system contributed to oil consumption." SAC ¶ 231. Because Plaintiffs' class period covers sales from 2010-2013, these two TSBs-issued relatively early in the Class Period in mid-2010 and early-2011-permit the plausible inference that Defendant had knowledge prior to the Class Period. Cf. In re MyFord Touch , 46 F.Supp.3d at 958 ("[I]t is still reasonable to infer that, if Ford had issued four TSBs and two updates in 2012 alone, Ford should have known of problems with MFT by around 2011, i.e. , before it could recommend what repairs or updates needed to be done. Presumably, the TSBs and updates were [preceded] by an accretion of knowledge by Ford."); MacDonald , 37 F.Supp.3d at 1093-94 (TSBs issued five and nine months after purchase, even if only dealing with a particular model vehicle, support plausible inference of knowledge of defect prior to sale of other vehicles including same defective cooling pump); Philips v. Ford Motor Company , 2015 WL 4111448, at *9-10 (N.D.Cal. July 7, 2015) (same).
With respect to the consumer complaints, Plaintiffs not only present a significantly larger number, but also allege that the number of complaints far exceeds the number of similar complaints for competitor vehicles. See SAC ¶ 279 (only zero to five complaints regarding oil consumption with respect to 7 competitor vehicles in the 2007-2013 model years). Thus, unlike before, the Court now has a baseline upon which to conclude that Plaintiffs have plausibly pled an unusual number of complaints.
It is true, as Defendant points out, that a number of the complaints relate to non-Class Vehicles (models of the same vehicles preceding the Class Period or other vehicles altogether). However, all the vehicles are equipped with the same allegedly defective engine and thus bolster the plausibility of inferring Defendant's general knowledge of the over-consumption problem associated with that engine. Cf. MacDonald , 37 F.Supp.3d at 1093-94 (TSB
issued with respect to only one vehicle model permits plausible inference with respect to knowledge of same defective component in other vehicle model). Additionally, since the focus is on pre -sale knowledge with respect to Class Vehicles, the emphasis is rightly on complaints that arose prior to sale of the Class Vehicles. Thus, it is reasonable that complaints associated with earlier model years (several dating as far back as 2008), see SAC ¶ 249, support a plausible inference of knowledge with respect to later model years equipped with the same allegedly defective component.
That the complaints do not specifically identify the low-tension oil rings is no longer an issue because Plaintiffs now allege that there were various failing parts associated with the Gen IV Vortec 5300 engine that contributed to overconsumption. Where the complaints all relate to the same phenomenon (excessive oil consumption), the number is unusually high, and all complaints pertain to a group of vehicles with a common component (the engine), one plausible inference is that GM was generally aware of the over-consumption problem with the engine even if it had not yet isolated a specific cause for or solution to the problem. An inference of knowledge is further supported by several consumer complaints which state that the dealers to whom vehicles were presented for repair asserted that it was a "known" problem or common issue.
To be sure, other inferences might plausibly be drawn from the complaints. For example, since more complaints appear to be associated with earlier models of the vehicles, another plausible inference could be that the defect was substantially repaired or resolved with respect to later vehicles. However, "[t]hat [GM] is able to identify competing inferences from the same set of facts does not mean that Plaintiffs' claims should be dismissed." MacDonald , 37 F.Supp.3d at 1093.
At this pleading stage, Plaintiffs have included sufficient allegations to support a plausible inference that Defendant was aware of the oil consumption defect with respect to the Class Vehicles prior to their sale. Moreover, Defendant has not identified any basis to believe that Plaintiffs could have been aware of the severity of the defect before purchasing the vehicles, so Plaintiffs' allegations support a plausible inference that the details about the cause, extent, and resolvability vel non of the defect were within Defendant's exclusive knowledge.
3. Materiality of Defect
Defendant argues that Plaintiffs fail to adequately plead that the information was material because they have not shown it pertained to an unreasonable safety risk. The Court previously dismissed Plaintiffs' allegation of a material defect on two grounds. First, the Court held that as a matter of law Plaintiffs must plead an unreasonable safety hazard under California law in order to demonstrate the defect was material. See Docket No. 62 at 9. Second, the Court held that Plaintiffs had failed to plead an unreasonable safety hazard because "no facts in this case suggest that the risk of excess oil consumption causes a safety risk," and "Plaintiffs admit that there [was] a functioning oil level gauge that will give advance warning of low levels." Docket No. 62 at 10-11. Moreover, "not a single plaintiff allege[d] that his or her vehicle experienced any damage due to excessive oil consumption;" no complaints of "sudden loss of power" were made; and Plaintiffs did not establish a "risk of sudden failure." Id.
In re-visiting the issue on this motion to dismiss the SAC, the Court notes that both parties in both rounds of briefing overlooked a crucial distinction California law makes with respect to defects arising in-warranty and those arising post-warranty. In its prior holding, the Court treated both situations in an identical fashion, relying on language in Wilson v. Hewlett-Packard stating that a "manufacturer's duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue." 668 F.3d 1136, 1143-44 (9th Cir. 2012). The Court also relied on language in Williams v. Yamaha Motor Co. cited by the parties stating that a plaintiff must allege "the existence of an unreasonable safety hazard" to state a failure to disclose claim. 851 F.3d 1015, 1025 (9th Cir. 2017) (quoting Apodaca v. Whirlpool Corp. , No. 13-00725 JVS (ANx), 2013 WL 6477821, at *9 (C.D. Cal. Nov. 8, 2013) ). However, these quotations were specific to the facts of both cases. A pivotal fact in both Wilson and Williams was that the alleged defect did not manifest until after the warranty period. See Wilson , 668 F.3d at 1138 (laptop charging defect did not arise until after expiration of two-year limited warranty); Williams , 851 F.3d at 1019 (explaining that the premature corrosion defect "will not manifest until the three-year warranty period has expired"). Indeed, Wilson made clear that a safety issue must be alleged only when it arises after the warranty period. See 668 F.3d at 1142, n.1 and 1144 (distinguishing cases that found materiality in the absence of a safety defect on the basis that the defects arose "within the express warranty period").
Thus, as Apodaca -the same case quoted by the Ninth Circuit in Williams for the legal standard for claims alleging a failure to disclose-explains, the materiality analysis turns on whether the defect arises during or after an express warranty period:
First, a manufacturer has a duty to disclose any defects that fall within the warranty period, whether relating to safety or to costly repairs , that would have caused the consumer to not purchase the car if they had been disclosed. Second, the manufacturer also has a duty to disclose safety issues that fall outside of the warranty period.
Apodaca , 2013 WL 6477821, at *7 (quoting Decker v. Mazda Motor of Am., Inc. , No. 11-cv-0873, 2011 WL 5101705, at *4 (C.D. Cal. Oct. 24, 2011) ) (emphasis added). Although neither party briefed the issue, the Court finds it necessary to analyze the viability of this claim separately with respect to in-warranty and post-warranty claims.
a. Warranty Period Claims
As a preliminary matter, the Class Vehicles in this case consist of 2010-2014 model years. Several plaintiffs allege they experienced excessive oil consumption during the warranty period. See, e.g., SAC ¶ 58 (Plaintiff Shorter); SAC ¶¶ 154-155 (Plaintiff Martell); SAC ¶ 202 (Plaintiff Bednarek). Consumer complaints also indicate that excessive oil consumption was experienced within the warranty period. See , e.g. , SAC ¶¶ 255, 258, 265, 271, 272. GM provides Class Vehicles with a three-year, 36,000 miles "bumper to bumper" warranty and a five-year, 100,000 mile powertrain warranty. See SAC ¶¶ 223-31; see also ECF Docket No. 48-22 to 48-29.
Thus, Plaintiffs have plausibly alleged that the defect may arise during the limited warranty period. To state a claim for failure to disclose the defect in these circumstances, Plaintiffs need only allege that the defect "would have caused [them] to not purchase the car if [it] had been disclosed" to show that it was material. Apodaca , 2013 WL 6477821, at *7 (quotation and citation omitted). Plaintiffs have done so. See , e.g. , SAC ¶¶ 20, 394-395, 411, 443-444, 460. Thus, Plaintiffs have adequately pleaded materiality for the in-warranty claims.
b. Post-Warranty Period Claims
With respect to defects that manifested only after the warranty period, Plaintiffs must allege that the defect poses an unreasonable safety hazard. As explained above, the purpose of this limitation in the post-warranty context is to protect against the de facto extension of a warranty.
Whether the defect poses an unreasonable safety hazard is a two-step inquiry. "Where a plaintiff alleges a sufficiently close nexus between the claimed defect and the alleged safety issue, the injury risk need not have come to fruition." Williams , at 1028. However, if the nexus is not "sufficiently close," then a plaintiff must allege examples of the safety risk coming to fruition to plausibly plead an unreasonable safety hazard. Id. (explaining that "a party's allegations of an unreasonable safety hazard must describe more than merely conjectural and hypothetical injuries") (citation and quotation omitted). A "sufficiently close nexus" exists when the causal chain between the alleged defect and the ultimate safety hazard is adequately explained. The nexus is not sufficiently close, however, where the connection is not explained or appears illogical.
Here, Plaintiffs adequately allege a sufficiently close nexus and have also provided examples of injury that make their allegations of an unreasonable safety hazard plausible. Plaintiffs allege the Oil Consumption Defect can lead to engine damage and engine failure, exposing drivers to the risk of suddenly inoperable vehicles. SAC ¶ 245. They allege in detail that the various defects cause excessive oil consumption. For example, the piston rings "fail to achieve their intended purpose of keeping oil in the crankcase and out of the combustion chamber," resulting in "excessive oil consumption." Id. ¶ 218; see SAC ¶¶ 214-222. Additionally, the AFM system "overwhelm[s] the independently defective piston rings" by "spray[ing] oil directly into the piston skirts (undersides) in quantities that the rings cannot control" and therefore "allow[ing] excessive quantities of oil in the combustion chambers where it is burned." SAC ¶¶ 223-225. The PCV system "also contributes to oil consumption and engine damage by vacuuming oil from the valvetrain," which it is not supposed to do, further contributing to excessive oil consumption. SAC ¶¶ 228-231.
The excessive consumption of oil, in turn, results in insufficient