1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHARLES DRAKE, Case No. 23-cv-00939-AMO
8 Plaintiff, ORDER GRANTING IN PART AND 9 v. DENYING IN PART DEFENDANT’S MOTION TO DISMISS 10 HAIER US APPLIANCE SOLUTIONS INC., Re: Dkt. No. 20 11 Defendant.
12 13 Defendant Haier US Appliance Solutions Inc.’s motion to dismiss was heard before this 14 Court on August 10, 2023. Having read the papers filed by the parties and carefully considered 15 their arguments therein and those made at the hearing, as well as the relevant legal authority, the 16 Court hereby GRANTS the motion in part and DENIES the motion in part for the following 17 reasons. 18 BACKGROUND 19 The Complaint makes the following allegations, which the Court accepts as true for 20 purposes of the motion to dismiss. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 21 1987). Plaintiff Charles Drake lives in McKinleyville, California. Compl. ¶ 6. In November 22 2022, Drake purchased a GE gas stove manufactured by Defendant and sold through a third-party 23 retailer. Compl. ¶ 38. Defendant Haier US Appliance Solutions, Inc. (“Haier”) makes, distributes, 24 sells, and markets gas stoves, ovens, and range products, including under the GE brand. Compl. 25 ¶ 8. Haier is a Delaware corporation with a principal place of business in Louisville, Kentucky. 26 Compl. ¶ 9. 27 Drake contends that Haier misleads consumers into believing that gas stoves are generally 1 See Compl. ¶¶ 1, 4, 32-33, 37, 41. Although “[a]bout 40% of American households use natural 2 gas stoves,” they have a “defect” because they purportedly emit “air pollutants . . . linked to 3 respiratory illness, cardiovascular problems, cancer, and other health conditions.” Compl. ¶¶ 1, 4 32-33. Haier knew that gas stoves and related products emit health-harming pollutants. Compl. 5 ¶¶ 22-27. Moreover, Haier was aware of safe, reasonable alternative designs that would avoid or 6 reduce the harmful pollutants emitted by gas stoves. Compl. ¶¶ 28-29. 7 Haier should have warned consumers of the pollutant risks, Drake contends. Compl. 8 ¶¶ 30-33. If Haier had included such a warning, demand for gas stoves and related products would 9 decrease, leading to a decrease in price – this failure to disclose the risks artificially inflates the 10 price of gas stoves, leading Drake and other consumers to overpay for the products and suffer 11 damages. Compl. ¶¶ 34-37. 12 Drake does not allege that he or his family have been physically harmed by the gas stove 13 he purchased. Drake does not state anything specific about his gas stove or its emissions. Rather, 14 Drake’s and the putative class’s damages are premised on the economic loss of overpaying for gas 15 stoves that would have been cheaper if the public had not been gaslit and knew of the stoves’ 16 inherent danger. 17 Drake filed the operative complaint on March 2, 2023. ECF 1. He seeks to represent the 18 following classes: 19 • Nationwide Class: all persons who purchased Defendant’s Products while living in the 20 United States during the applicable statute of limitations. 21 • California Subclass: all persons who, while living in the state of California, purchased 22 Defendant’s Products during the applicable statute of limitations; and 23 • Consumer Protection Subclass: all persons who, while living in certain identified states 24 (the “Consumer Protection Subclass States”), purchased Defendant’s Products States 25 during the applicable statute of limitations. 26 Compl. ¶ 47. 27 Drake alleges the following causes of action on behalf of himself and the California sub- 1 1. Violation of California’s Unfair Competition Law (“UCL”) (including each prong, 2 unlawful, fraudulent, and unfair) 3 2. Violation of California’s False Advertising Law (“FAL”) 4 3. Violation of California’s Consumer Legal Remedies Act (“CLRA”) 5 4. Breach of implied warranty pursuant to California’s Song-Beverly Consumer Warranty 6 Act 7 Drake alleges the following causes of action on behalf of himself and the nationwide class: 8 5. Violations of State Consumer Protection Statutes in California, Connecticut, Illinois, 9 Maryland, Missouri, and New York 10 6. Breach of implied warranties under the Uniform Commercial Code 11 a. Implied warranty of merchantability (UCC § 2-314) 12 b. Implied warranty of fitness (UCC § 2-315) 13 7. Fraudulent Omission 14 8. Unjust Enrichment / Quasi-contract 15 Haier filed the instant motion to dismiss on May 3, 2023. ECF 20. Haier filed a request 16 for judicial notice in support of the motion (ECF 20-1), which the Court considers before reaching 17 the merits of the motion. 18 REQUEST FOR JUDICIAL NOTICE 19 Haier requests that the Court take judicial notice of the following documents in support of 20 the motion (ECF 20-1): 21 a. US Energy Information Administration, Highlights for appliances in U.S. homes by state, 22 2020 (Final data release: March 2023). 23 b. US Consumer Product Safety Commission, Statement of Chair Alexander Hoehn-Saric 24 Regarding Gas Stoves (Jan. 11, 2023). 25 c. US Consumer Product Safety Commission, Request for Information on Chronic Hazards 26 Associated With Gas Ranges and Proposed Solutions (Mar. 7, 2023). 27 d. GE Appliances, Single Oven Gas Ranges Owner’s Manual. 1 Federal Rule of Evidence 201 permits a court to notice a fact if it is “not subject to 2 reasonable dispute.” Fed. R. Evid. 201(b). A fact is “not subject to reasonable dispute” if it is 3 “generally known,” or “can be accurately and readily determined from sources whose accuracy 4 cannot reasonably be questioned.” Fed. R. Evid. 201(b)(1)-(2). Under the incorporation by 5 reference doctrine, the court has discretion to consider on a motion to dismiss “documents whose 6 contents are alleged in a complaint and whose authenticity no party questions, but which are not 7 physically attached to the [plaintiff’s] pleading.” Davis v. HSBC Bank Nevada, N.A., 691 F.3d 8 1152, 1160 (9th Cir. 2012); see also United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) 9 (“Even if a document is not attached to a complaint, it may be incorporated by reference into a 10 complaint if the plaintiff refers extensively to the document or the document forms the basis of the 11 plaintiff’s claim.”). 12 Haier does not argue that the government reports are incorporated into the complaint by 13 reference, nor does Haier provide any reasoning why the Court should consider these materials in 14 conjunction with the motion to dismiss. Haier merely suggests that the Court can take notice of 15 these materials because they are government reports. Haier seems to offer these items in aid of its 16 factual assertion that its gas stoves are perfectly safe and that evidence to the contrary is flawed. 17 This improperly disputes the pleaded facts and draws all inferences in Defendant’s own favor. 18 See, e.g., In re Splunk Inc. Sec. Litig., 592 F. Supp. 3d 919, 946 (N.D. Cal. 2022) (rejecting the 19 defendant’s argument because it “is subject to a reasonable dispute, and the Court may not resolve 20 factual disputes at the pleading stage”); Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1003 21 (9th Cir. 2018) (reaffirming “the prohibition against resolving factual disputes at the pleading 22 stage”). Further, the Court finds that there is no reason to rely on the documents in deciding the 23 motion to dismiss. Therefore, the Court DENIES the request for judicial notice as moot. 24 DISCUSSION 25 A. Legal Standard 26 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal 27 sufficiency of the claims alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199-1200 (9th 1 “short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. 2 P. 8(a)(2), a complaint may be dismissed under Rule 12(b)(6) if the plaintiff fails to state a 3 cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. 4 Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013). 5 While the court is to accept as true all the factual allegations in the complaint, legally 6 conclusory statements, not supported by actual factual allegations, need not be accepted. Ashcroft 7 v. Iqbal, 556 U.S. 662, 678-79 (2009). The complaint must proffer sufficient facts to state a claim 8 for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 558-59 9 (2007) (citations and quotations omitted). “A claim has facial plausibility when the plaintiff 10 pleads factual content that allows the court to draw the reasonable inference that the defendant is 11 liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citation omitted). “[W]here the well- 12 pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the 13 complaint has alleged—but it has not ‘show[n]’—that the pleader is entitled to relief.” Id. at 679. 14 Review is generally limited to the contents of the complaint, although the court can also 15 consider a document on which the complaint relies if the document is central to the claims 16 asserted, and no party questions the authenticity of the document. See Sanders v. Brown, 504 F.3d 17 903, 910 (9th Cir. 2007). The court may also consider documents referenced extensively in the 18 complaint and documents that form the basis of the plaintiffs’ claims. See No. 84 Emp’r-Teamster 19 Jt. Council Pension Tr. Fund v. Am. W. Holding Corp., 320 F.3d 920, 925 n.2 (9th Cir. 2003). 20 If dismissal is warranted, it is generally without prejudice, unless it is clear that the 21 complaint cannot be saved by any amendment. Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 22 2005). “Leave to amend may also be denied for repeated failure to cure deficiencies by previous 23 amendment.” Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th Cir. 2008). 24 B. Analysis 25 Haier challenges Drake’s Complaint on several grounds. The Court first addresses 26 threshold issues, including Drake’s standing and potential preemption of his claims. The Court 27 then addresses Haier’s challenge to the sufficiency of Drake’s pleading of both the claims 1 whether Drake was obligated to comply with California pre-suit notice requirements and whether 2 his failure to do so bars his California consumer claims. 3 1. Threshold Issues 4 The Court considers three threshold issues at the outset: whether Drake pleads an 5 actionable defect, whether Drake has standing to pursue claims under the statutes of other states, 6 and whether Drake’s claims are preempted by federal law. 7 a. Actionable Defect 8 Although all of Drake’s claims depend on Haier’s selling him a defective product, this is 9 not a products liability action. Drake cannot pursue products liability claims because he did not 10 experience physical injury to person or property. See San Francisco Unified School Dist. v. W.R. 11 Grace & Co., 37 Cal. App. 4th 1318, 1327 (1995) (“Until physical injury occurs – until damage 12 rises above the level of mere economic loss – a plaintiff cannot state a cause of action for strict 13 liability or negligence.”). Because products liability law does not authorize no-injury actions, 14 Drake instead attempts to ground his claims in consumer fraud: that Haier wrongfully induced 15 Drake and others to purchase their gas stoves and related products by concealing the inherent 16 danger of maintaining such products in their homes. Drake pursues economic damages on the 17 basis that he and others would have paid less for the gas stoves or would not have purchased them 18 at all had they known of the danger. 19 The Ninth Circuit has held that overpayment itself is “injury in fact” under Article III. 20 Mazza v. Am. Honda Motor Co., 666 F.3d 581, 595 (9th Cir. 2012) (overruled on other grounds by 21 Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 682 (9th Cir. 22 2022), cert. denied sub nom. StarKist Co. v. Olean Wholesale Grocery Coop., Inc., 143 S. Ct. 424 23 (2022)) (finding that Article III standing exists in a fraudulent omission case when “plaintiffs 24 contend that class members paid more for [a product] than they otherwise would have paid, or 25 bought it when they otherwise would not have done so.”) However, the Ninth Circuit has also 26 rejected attempts to “recast a no-injury products liability action” as a fraud or breach of warranty 27 suit. Birdsong v. Apple, Inc., 590 F.3d 955, 960-61 (9th Cir. 2009). 1 cancellation or a volume meter that would warn users that they were at risk of hearing loss 2 diminished the products’ value. Id. at 958. The Ninth Circuit found that “the alleged loss in value 3 does not constitute a distinct and palpable injury that is actual or imminent because it rests on a 4 hypothetical risk of hearing loss to other consumers who may or may not choose to use their iPods 5 in a risky manner.” Id. at 961. Thus, although the plaintiffs’ alleged economic harm centered “on 6 their claim that the iPod has a defect (an inherent risk of hearing loss),” they “failed to allege any 7 cognizable defect,” and they ultimately failed to plead any injury in fact. Id. at 961-62. 8 In Lassen, the plaintiffs claimed that their vehicles’ keyless fob systems were defective 9 because they could be used in a dangerous way, and the vehicles lacked a safety feature – Auto- 10 Off – that could mitigate that danger. Lassen v. Nissan N. Am., Inc., 211 F. Supp. 3d 1267, 1282 11 (C.D. Cal. 2016). The district court, relying in part on Birdsong, rejected the plaintiffs’ claims 12 that the vehicles diminished in value due to the alleged defect. Id. at 1281-84. While the court 13 recognized that diminution in value could theoretically constitute a cognizable injury, it suggested 14 that such diminution could only establish standing where widespread reports of the defect could 15 decrease market demand for the vehicle. Id. at 1280 (citing In re Toyota Motor Corp. Unintended 16 Acceleration Mktg., Sales Pracs., & Prod. Liab. Litig., 754 F. Supp. 2d 1145, 1162 (C.D. Cal. 17 2010) (finding standing where plaintiffs pleaded widespread knowledge about defect, market 18 value declined, and plaintiffs sold vehicles at a loss)). 19 Courts distinguish, however, cases in which plaintiffs allege economic harm based on a 20 product’s lack of an unbargained-for safety feature from cases in which plaintiffs allege that a 21 product was defective because it did not function as advertised. See In re Arris Cable Modem 22 Consumer Litig., 327 F.R.D. 334 (N.D. Cal. 2018). In Arris Cable, for example, Judge Koh 23 contrasted the lack of injury in Birdsong and Lassen from claims that the Arris defendants’ cable 24 modems were defective because they “did not offer as fast and as reliable an Internet connection 25 as advertised,” claims that constituted injury-in-fact. Id. at 353. The court there noted, “at the 26 center of the reasoning in Birdsong [and] Lassen is a discomfort with no-injury products liability 27 actions being tried as consumer fraud cases.” Id. at 352. 1 consumer fraud claim, much like the circumstances in Birdsong and Lassen because Drake’s 2 claims hinge on product liability theories. Compl. ¶¶ 1, 16-21, 23-27 (alleging gas stove emits air 3 pollutants at unsafe levels whenever use as intended to cook in the home). Drake charges that 4 Haier failed to warn of the risk that any gas stove could emit pollutants (a failure to warn theory) 5 (Compl. ¶¶ 30-33); and that gas stoves should have safer designs that use less gas (a design defect 6 theory) (¶¶ 28-29). But Drake’s allegations contrast with those in Birdsong because he alleges 7 that the danger posed by gas stoves is inherent to the product, not only when used in an unsafe 8 manner. Drake’s allegations that the products are inherently defective even when used as 9 intended, in conjunction with his contention that that he would not have paid as much had he 10 known of the defect, more closely resemble the allegations in Arris Cable. Such claims are 11 sufficient to establish injury-in-fact to support standing. Drake need not allege more specific 12 losses, he need only establish a redressable injury, and the market effect of the allegedly defective 13 gas stoves is sufficient to establish an actual or imminent harm under Mazza. Therefore, Drake 14 sufficiently alleges an actionable defect at this stage of the case, and his claims need not be 15 dismissed on this basis. 16 b. Claims Under the Statutes of Other States 17 “Courts in the Ninth Circuit have consistently held that a plaintiff in a putative class action 18 lacks standing to assert claims under the laws of states other than those where the plaintiff resides 19 or was injured.” Jones v. Micron Tech. Inc., 400 F. Supp. 3d 897, 908 (N.D. Cal. 2019) (citations 20 omitted). “Claims for relief under the laws of the several states are separate claims for relief and 21 . . . require separate proof of standing.” Stemmelin v. Matterport, Inc., No. 20-CV-04168-WHA, 22 2020 WL 6544456, at *3 (N.D. Cal. Nov. 7, 2020). “When measuring standing claim by claim, a 23 named plaintiff must possess the requisite standing; it is not sufficient that a putative class member 24 may have standing to press one of the claims.” Razuki v. Nationstar Mortg., LLC, No. 18-CV- 25 03343-JD, 2020 WL 1478374, at *3 (N.D. Cal. Mar. 26, 2020) (citation omitted). “Consequently, 26 at least one named plaintiff must have Article III standing to bring a claim under the laws of each 27 state included in the alleged multi-state class.” Id. 1 California. Compl. ¶ 38. He advances a cause of action under the consumer protection laws of 2 other states (Connecticut, Illinois, Maryland, Missouri, and New York), but he does not allege that 3 he suffered injury in another state. There is no allegation that Drake has any connection to 4 Connecticut, Illinois, Maryland, Missouri, or New York. Drake thus lacks standing to bring 5 claims under the laws of states other than California. Accordingly, the claims under the consumer 6 laws of Connecticut, Illinois, Maryland, Missouri, and New York must be dismissed. 7 c. Preemption 8 Federal law preempts state law when: (1) Congress enacts a statute that explicitly 9 preempts state law; (2) federal law occupies a legislative field to such an extent that it is 10 reasonable to conclude that Congress left no room for state regulation in that field; or (3) state law 11 actually conflicts with federal law. Chae v. SLM Corp., 593 F.3d 936, 941 (9th Cir. 2010). 12 “Express preemption exists when a statute explicitly addresses preemption.” Reid v. Johnson & 13 Johnson, 780 F.3d 952, 959 (9th Cir. 2015). When a federal statue contains an express 14 preemption clause, “the task of statutory construction must in the first instance focus on the plain 15 wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive 16 intent.” Cal. Trucking Ass’n v. Bonta, 996 F.3d 644, 654 (9th Cir. 2021) (quoting CSX Transp., 17 Inc. v. Easterwood, 507 U.S. 658, 663 (1993)). “Preemption is an affirmative defense, so the 18 defendant bears the burden of pleading and supporting its preemption argument.” Cohen v. 19 ConAgra Brands, Inc., 16 F.4th 1283, 1289 (9th Cir. 2021). 20 Haier contends that the Energy Policy and Conservation Act (“EPCA”) preempts all of 21 Drake’s claims. The company avers that Drake’s claims amount to regulations “concerning” the 22 quantity of natural gas directly consumed by kitchen ranges at their point of use. ECF 20 at 13-15. 23 The EPCA promotes energy conservation and efficiency, including energy efficient products. See 24 42 U.S.C. § 6201 (statement of purpose); §§ 6291-6309 (regulating efficiency standards, testing, 25 and labeling of products). To prevent conflicting state regulations, the EPCA preempts any state 26 regulation “concerning the energy efficiency [or] energy use” of covered products, including 27 stoves (“[k]itchen ranges”) that use natural gas. 42 U.S.C. § 6297(c); § 6291(3); § 6292(10). 1 use.” 42 U.S.C. § 6291(4). The Ninth Circuit distills the EPCA to preempt “regulations that 2 relate to ‘the quantity of [natural gas] directly consumed by’ certain consumer appliances at the 3 place where those products are used.” Cal. Rest. Ass’n v. City of Berkeley, 65 F.4th 1045, 1050-51 4 (9th Cir. 2023) (also noting that EPCA’s preemptive scope is “extensive”). 5 Here, the consumer fraud and warranty laws underlying Drake’s claims do not concern 6 energy efficiency or energy use. Cf. Cal. Rest. Ass’n, 65 F.4th at 1050-51 (finding City of 7 Berkeley’s ban of natural gas piping in new buildings preempted by the EPCA). The claims here 8 do not regulate the amount of gas accessible to appliances, nor do they necessarily impact the 9 quantity of gas consumed by gas appliances at the point of use. Instead, the claims concern an 10 alleged fraud by omission in the form of Haier’s failure to inform the public of the emissions risks 11 of gas appliances, leading to overpayment for the products. Thus, Haier reliance on California 12 Restaurant Association is misplaced, and it fails to establish that Drake’s claims are preempted on 13 that basis. 14 Moreover, the Court cannot determine whether the relief sought by Drake would impact 15 the quantity of energy directly consumed by gas stoves. There are not enough facts available at 16 the pleading stage to demonstrate that the relief requested would have any impact on the quantity 17 of natural gas consumed at the point of use. Drake’s theory of the case suggests that either 18 improved gas stove efficiency or fewer gas stove purchases driven by additional warnings would 19 impact the quantity of natural gas used overall, but such results are speculative at this juncture, as 20 they are attenuated from the remedies sought. As Drake notes, requiring a warning would not 21 have any effect on the quantity of gas used in stoves at their point of use in consumers’ kitchens. 22 In sum, Haier fails to carry its burden to demonstrate that Drake’s claims are preempted by the 23 EPCA. 24 Having addressed threshold issues of standing, including whether Drake alleges an 25 actionable defect and whether his claims are preempted by the EPCA, the Court next turns to 26 whether Drake states a claim on which relief can be granted. 27 2. Sufficiency of Pleading 1 fraud and then his claims for breach of implied warranties. 2 a. Pleading of Fraud-Based Claims 3 Drake advances several causes of action sounding in fraud, including three claims under 4 California consumer protection statutes (UCL, FAL, and CLRA), and a claim of fraudulent 5 omission. Haier challenges the sufficiency of these allegations on several fronts, including (a) the 6 sufficiency of Drake’s pleading of consumer fraud by omission and (b) the sufficiency of pleading 7 Haier’s knowledge of the alleged defect prior to his purchase of the product. The Court takes 8 these up in turn. 9 i. Consumer Fraud by Omission 10 Haier primarily challenges Drake’s claims that sound in fraud by arguing that Drake has 11 insufficiently identified the who, what, when, where, and how of the misconduct charged. While 12 this is the standard plaintiffs normally need to meet, see Salameh v. Tarsadia Hotel, 726 F.3d 13 1124, 1133 (9th Cir. 2013) (citation and internal quotation marks omitted), a claim of fraud by 14 omission instead “requires a showing of (1) the concealment or suppression of material fact, (2) a 15 duty to disclose the fact to the plaintiff, (3) intentional concealment with intent to defraud, (4) 16 justifiable reliance, and (5) resulting damages.” Lewis v. Google LLC, 851 F. App’x 723, 725 (9th 17 Cir. 2021) (citation omitted). 18 Drake does not allege the necessary elements of fraud by omission under California law. 19 Most glaringly, Drake fails to plead the second and fourth elements of fraud by omission: that 20 Haier held a duty to disclose the fact of the emissions to him, or that Drake justifiably relied on 21 Haier’s concealment of the dangerous emissions from his gas stove. Given these defects, Drake 22 does not adequately plead his claims sounding in fraud, including those under the UCL, the 23 CRLA, and fraudulent omission, and they must be dismissed. 24 Drake also advances a False Advertising Law (“FAL”) claim based on the Haier’s alleged 25 omissions. However, a FAL claim is not cognizable when based solely on an omission of material 26 information. See, e.g., Norcia v. Samsung Telecomms. Am., LLC, No. 14-cv-00582-JD, 2015 WL 27 4967247, at * 8 (N.D. Cal. Aug. 20, 2015) (“There can be no FAL claim where there is no 1 Drake’s FAL claim must also be dismissed. 2 ii. Haier’s Knowledge of Alleged Defect Prior to Drake’s Purchase 3 In the Ninth Circuit, a plaintiff is typically required to allege how the defendant obtained 4 knowledge of the specific defect prior the plaintiff’s purchase of the defective product in order to 5 sufficiently allege the manufacturer’s awareness of a defect. Wilson v. Hewlett-Packard Co., 668 6 F.3d 1136, 1145-48 (9th Cir. 2012). In Wilson, the plaintiff alleged that Hewlett-Packard (“HP”), 7 the defendant, knew of the alleged product defect because it had access to aggregate information 8 and data, another lawsuit against HP was premised on the same purported defect, and HP received 9 several complaints from other customers about the defect. Id. at 1139. Even with the several 10 potential sources of information regarding the alleged defect, the court determined that they were 11 too conclusory. Id. at 1146-47; see also Hauck v. Advanced Micro Devices, Inc., No. 18-CV- 12 00447-LHK, 2018 WL 5729234, at *6 (N.D. Cal. Oct. 29, 2018) (“Under California law, a 13 manufacturer must have known of the defect at the time of sale for a plaintiff to state a claim for 14 fraud by omission against the manufacturer.”). Claims are deficient where they merely allege that 15 the defendant manufacturer had access to information about the defect or was in a “superior 16 position to know the truth about” the product. Wilson, 668 F.3d at 1147. 17 Here, Drake asserts in conclusory manner that Haier knew of the alleged defect underlying 18 this lawsuit. Compl. ¶ 22. Drake points to general publications about industry research, most of 19 which were made public after his purchase of a Haier gas stove. Compl. ¶¶ 16-21. Drake 20 contends that Haier knew of the alleged defect because it is a large company that routinely does 21 diligence on its products and tracks research. Compl. ¶ 27. However, such conclusory assertions 22 are insufficient to establish that Haier knew of the purported ill health effects of its gas stoves 23 prior to Drake’s purchase. Drake alleges no connection between Haier and the studies he cites, 24 appearing to conclude merely that Haier “should have known.” This does not meet the specificity 25 required for claims sounding in fraud. Therefore, the claims sounding in fraud must also be 26 dismissed on this basis. 27 b. Pleading of Breach of Warranty Claims 1 are sold at retail in [California] shall be accompanied by the manufacturer’s and the retail seller’s 2 implied warranty that the goods are merchantable.” Cal. Civ. Code § 1792. The implied warranty 3 of merchantability requires that the goods “(1) pass without objection in the trade under the 4 contract description; (2) are fit for the ordinary purpose for which those goods are used; (3) are 5 adequately contained, packaged, and labeled; and (4) conform to the promises or affirmation of 6 fact made on the container or label.” Birdsong, 590 F.3d at 958 n.2. A “core test of 7 merchantability is fitness for the ordinary purpose for which the goods are used.” Brand v. 8 Hyundai Motor Am., 226 Cal. App. 4th 1538, 1546 (2014). “Such fitness is shown if the product 9 is ‘in safe condition and substantially free from defects.’” Id. (quoting Mexia v. Rinker Boat Co., 10 Inc., 174 Cal. App. 4th 1297, 1303 (2009)). A breach of the implied warranty of merchantability 11 requires a plaintiff to show that the product does “not possess even the most basic degree of fitness 12 for ordinary use.” Mocek v. Alfa Leisure, Inc., 114 Cal. App. 4th 402, 406 (2003). However, 13 California courts generally reject the argument that a product is fit for ordinary use as long as it 14 continues to provide its most basic function. See, e.g., Sloan v. GM, LLC, 287 F. Supp. 3d 840, 15 879 (N.D. Cal. 2018) (rejecting argument that a “car is fit for ordinary use as long as it continues 16 to provide transportation, irrespective of safety concerns.”) 17 Drake pleads that the emissions of gas stoves constitute a material safety-related defect. 18 He alleges that Haier’s stoves “emit air pollutants . . . at levels the EPA and World Health 19 Organization have said are unsafe,” especially “nitrogen oxides, which are gases that can worsen 20 asthma and other lung diseases.” Compl. ¶¶ 1, 16-21. And he asserts that, absent a warning, this 21 creates a safety hazard because operating the stoves as intended for home cooking leads to 22 dangerous concentrations of nitrogen dioxide in the home. Compl. ¶ 20. While Haier asserts that 23 Drake has not alleged that his stove fails to perform as intended, Haier misses the mark because a 24 product that poses a material safety hazard when used as intended is unmerchantable. See Mocek, 25 114 Cal. App. 4th at 406; Sloan, 287 F. Supp. 3d at 879. By alleging a material safety-related 26 defect, Drake has adequately pleaded that his gas stove was unfit for ordinary use. He accordingly 27 states a claim for breach of the implied warranty of merchantability, and Haier’s motion to dismiss 1 Because Drake does not address Haier’s argument regarding the implied warranty of 2 fitness, Haier’s motion to dismiss that cause of action is granted. 3 3. Compliance with Proposition 65 4 Proposition 65 prohibits companies from “intentionally expos[ing] any individual to a 5 chemical known to the state to cause cancer or reproductive toxicity without first giving clear and 6 reasonable warning.” Cal. Health & Safety Code § 25249.6. The chemicals subject to Proposition 7 65 are specifically identified in the applicable regulations. Cal. Code Regs. Tit. 27, § 27001 8 (listing Proposition 65 chemicals). Proposition 65 allows private parties to bring civil actions in 9 the public interest if “the private action is commenced more than 60 days from the date that the 10 person has given notice of the alleged violation” to the defendant, the California Attorney General, 11 and the “district attorney, city attorney, or prosecutor in the jurisdiction in which the violation is 12 alleged to have occurred.” Cal. Health & Safety Code § 25249.7(d)(1). The notice must include 13 “a certificate of merit” that affirms the party has “consulted with one or more persons with 14 relevant and appropriate experience or expertise . . . regarding the exposure” and that “based on 15 that information, the person executing the certificate believes there is a reasonable and meritorious 16 case for the private action.” Id. “California cases strictly enforce the notice requirements and hold 17 that pre-filing notice is mandatory.” Sciortino v. Pepsico, Inc., 108 F. Supp. 3d 780, 790 (N.D. 18 Cal. 2015) (discussing cases). Thus, “if a Plaintiff commenced an action under Proposition 65 19 without providing suitable statutory notice, the Plaintiff should not be able to maintain that 20 action.” Id. at 790. “Dismissal with prejudice would be proper, because improper notice cannot 21 be retroactively cured.” Id. (listing cases). The district court in Sciortino dismissed some, but not 22 all claims relating to Proposition 65 chemicals. The court differentiated between claims that were 23 “entirely derivative of an unspoken Proposition 65 violation” and those that were independent of 24 the statute. Id. at 792. Ultimately, the court refused to dismiss claims where the only relevance of 25 Proposition 65 was to “provide[ ] guidance as to a reasonable consumer’s purchasing decisions in 26 California.” Id. at 794. 27 Here, Drake does not make any effort to contend that he complied with Proposition 65’s 1 Proposition 65 requirements because his claims do not implicate the statute where the pollutant 2 that Haier should have warned about – nitrogen dioxide – is not a Proposition 65-listed chemical. 3 See Cal. Code Regs. Tit. 27, § 27001. Drake’s argument engages in inappropriate revisionism. 4 Drake alleges that Haier’s gas stoves emit “air pollutants . . . linked to . . . cancer” and “poorer 5 birth outcomes,” the same dangers Proposition 65 states it is intended to warn against. Compl. 6 ¶¶ 1, 17, 19; Cal. Health & Safety Code § 25249.6. Among the “pollutants” are “carbon 7 monoxide” (¶ 17), as well as benzene, hexane, and toluene (see, e.g., articles cited at ¶ 1 n.3, ¶ 24 8 n.20),1 which are Proposition 65-listed. See Cal. Code Regs. Tit. 27, § 27001. Drake emphasizes 9 nitrogen dioxide as the primary pollutant throughout his Complaint, and he attempts in his 10 opposition to gloss over the other pollutants referenced in the pleading. Such narrow focus on 11 nitrogen oxide to the exclusion of others appears to be a deliberate effort to circumvent 12 Proposition 65’s notice requirements. The Court finds that Drake’s claims are entirely derivative 13 of an unspoken Proposition 65 violation. Drake accordingly runs afoul of Proposition 65’s pre- 14 suit requirements, defects that cannot retroactively be cured. Therefore, the Court must dismiss 15 Drake’s claims under the UCL, CLRA, and FAL with prejudice. 16 Drake’s claims for equitable relief arise under these same California consumer protection 17 statutes. See ECF 27 at 33; see also Cal. Bus. & Prof. Code § 17203 (injunctive relief under the 18 UCL), Cal. Civ. Code § 1782 (same under the CLRA), Cal. Bus. & Prof. Code §17535 (injunctive 19 relief and restitution under FAL). Because these claims are dismissed, the Court does not reach 20 the parties’ arguments regarding whether Drake’s prayer for equitable relief under such claims 21 must be dismissed. 22 CONCLUSION 23 For the foregoing reasons, the Court hereby GRANTS in part and DENIES in part 24 Defendant’s motion to dismiss. Drake’s claims for violation of the UCL (Count 1), violation of 25 the FAL (Count 2), violation of the CLRA (Count 3), and fraudulent omission (Count 7) are all 26
27 1 The Court considers these articles referenced in the Complaint and underlying Drake’s claims to 1 DISMISSED WITH PREJUDICE. Drake’s claim for violations of the consumer protection 2 || laws of other states outside of California (Count 5) is DISMISSED with prejudice because Drake 3 || lacks standing to bring them. Drake’s claims for breach of implied warranty pursuant to 4 || California’s Song-Beverly Consumer Warranty Act (Count 4) is DISMISSED with leave to 5 amend. Drake’s claim for breach of the implied warranty of merchantability (Count 6) is not 6 || dismissed, but his claim for breach of the implied warranty of fitness under the same count is 7 || DISMISSED based on Drake’s failure to oppose the motion. Drake’s claim for unjust enrichment 8 || or quasi-contract (Count 8) is similarly DISMISSED for failure to oppose the motion. Plaintiff 9 || may file an amended complaint no later than March 14, 2024. No additional parties or claims may 10 || be added without leave of court or stipulation of Defendant. 11 IT IS SO ORDERED. e 12 Dated: February 13, 2024
□□ / □ ‘ coh ARACELI MARTINEZ-OLGUIN 15 United States District Judge 16
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