Mahan Taleshpour v. Apple, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 19, 2022
• Docket: 21-16282
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 19 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

MAHAN TALESHPOUR, et al., No. 21-16282

Plaintiffs-Appellants, D.C. No. 5:20-cv-03122-EJD

v. MEMORANDUM*

APPLE, INC.,

Defendant-Appellee.

Appeal from the United States District Court for the Northern District of California Edward J. Davila, District Judge, Presiding

Argued and Submitted May 10, 2022 San Francisco, California

Before: O’SCANNLAIN and BUMATAY, Circuit Judges, and BAKER,** Interna- tional Trade Judge.

Plaintiffs appeal from the district court’s dismissal of their putative class ac-

tion asserting statutory and common law claims against Apple under the laws of

California and other states based on an alleged defect that, sometime after the

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable M. Miller Baker, Judge for the United States Court of International Trade, sitting by designation. warranty expires, causes MacBook Pro laptops’ built-in displays to malfunction and

eventually stop working altogether.

1. The California Consumer Legal Remedies Act (CLRA) “proscribes partic-

ular unfair methods of competition and unfair or deceptive acts or practices in trans-

actions for the sale or lease of goods or services to consumers.” Rutledge v. Hewlett-

Packard Co., 190 Cal. Rptr. 3d 411, 418 (Ct. App. 2015) (cleaned up). As relevant

here, the unlawful acts the statute prohibits include “[r]epresenting that goods . . .

have . . . characteristics . . . that they do not have,” Cal. Civ. Code § 1770(a)(5),

“[r]epresenting that goods . . . are of a particular standard, quality, or grade . . . if

they are of another,” id. § 1770(a)(7), and “[a]dvertising goods or services with in-

tent not to sell them as advertised,” id. § 1770(a)(9).

In Wilson v. Hewlett-Packard Co., 668 F.3d 1136 (9th Cir. 2012), we held that

a plaintiff asserting a claim of fraud by omission relating to a defect that manifests

after the applicable warranty has expired must allege either physical injury or a

“safety concern” posed by the defect. Id. at 1141–42 (discussing Daugherty v. Am.

Honda Motor Co., 51 Cal. Rptr. 3d 118, 127 (Ct. App. 2006)). “California federal

courts have generally interpreted Daugherty as holding that a manufacturer’s duty

to consumers is limited to its warranty obligations absent either an affirmative mis-

representation or a safety issue.” Id. at 1141 (cleaned up) (citing district court cases).

2 Plaintiffs ask us to revisit Wilson,1 arguing that its “safety hazard” holding is

no longer good law in view of Hodsdon v. Mars, Inc., 891 F.3d 857 (9th Cir. 2018).

Plaintiffs’ reliance on Hodsdon fails for two reasons. First, “a three-judge panel may

not overrule a prior decision of the court” unless that prior decision is effectively

overruled by a state or federal court “of last resort.” Miller v. Gammie, 335 F.3d 889,

899–900 (9th Cir. 2003) (en banc). “We are not free to read California law without

deferring to our own precedent on how to construe it.” Int’l Bus. Machs. Corp. v.

Bajorek, 191 F.3d 1033, 1041 (9th Cir. 1999). Thus, Wilson is binding on us, regard-

less of how we may read Hodsdon. Second, Hodsdon is distinguishable—it involved

candy bar wrappers, rather than a product defect or a warranty issue, and the court

expressly declined to address circuit precedent on the duty to disclose because it was

unnecessary to do so. 891 F.3d at 860. Thus, Plaintiffs’ reliance on Hodsdon is una-

vailing even without regard to Wilson.

The district court here specifically relied on Wilson to conclude that a manu-

facturer’s duty to disclose is limited to its warranty obligations unless the manufac-

turer makes an affirmative representation or the defect relates to a safety issue. Plain-

tiffs do not challenge the former finding and admit they have not alleged a safety

issue. We therefore affirm the district court’s dismissal of the CLRA claims.

1 At oral argument, counsel urged us to “tweak” Wilson.

3 2. Plaintiffs’ claim that Apple engaged in “fraudulent” business acts under the

California Unfair Competition law (UCL), Cal. Bus. & Prof. Code § 17200, fails for

similar reasons. “Historically, the term ‘fraudulent,’ as used in the UCL, has required

only a showing that members of the public are likely to be deceived.” Daugherty, 51

Cal. Rptr. 3d at 128. Significantly, however, “[w]e cannot agree that a failure to

disclose a fact one has no affirmative duty to disclose is ‘likely to deceive’ anyone

within the meaning of the UCL.” Id.; see also Hodsdon, 891 F.3d at 865 (quoting

that sentence to reject a “fraudulent prong” UCL claim). Because we affirm the dis-

trict court’s finding that Apple had no duty to disclose the alleged defect, we must

also affirm its rejection of the “fraudulent” prong UCL claim.

3. For UCL purposes, “[a]n act or practice is unfair if the consumer injury is

substantial, is not outweighed by any countervailing benefits to consumers or to

competition, and is not an injury the consumers themselves could reasonably have

avoided.” Daugherty, 51 Cal. Rptr. 3d at 129. However, “the failure to disclose a

defect that might, or might not, shorten the effective life span of [a part] that func-

tions precisely as warranted throughout the term of its express warranty cannot be

characterized as causing a substantial injury to consumers, and accordingly does not

constitute an unfair practice under the UCL.” Id. at 130; see also Hodsdon, 891 F.3d

at 867 (“Mars’ failure to disclose information it had no duty to disclose in the first

place is not substantially injurious . . . .”). All of Plaintiffs’ allegations refer to

4 problems experienced well after their laptops’ warranties expired, so we affirm the

district court’s dismissal of Plaintiffs’ UCL “unfairness” claim.

4. “By pr[o]scribing ‘any unlawful’ business practice, the UCL borrows vio-

lations of other laws and treats them as unlawful practices that the UCL makes in-

dependently actionable.” Gutierrez v. CarMax Auto Superstores Cal., 248 Cal. Rptr.

3d 61, 90 (Ct. App. 2018). Plaintiffs’ theory that Apple’s conduct was “unlawful”

for UCL purposes is premised solely on their theory that Apple violated the CLRA,

so we affirm the district court’s dismissal of their UCL “unlawful” claim for the

reasons stated above.

5. We affirm the district court’s dismissal of Plaintiffs’ California common-

law fraudulent concealment claim because the parties have treated it as part and par-

cel of Plaintiffs’ CLRA and UCL claims. Moreover, at oral argument, Plaintiffs’

counsel conceded that the common law claim rises or falls with the statutory claims

because the causes of action are “intertwined.”

6. Finally, we also affirm the district court’s dismissal of Plaintiffs’ claims

under the deceptive trade practice statutes in Washington, Florida, New Jersey,

Michigan, Alaska, Missouri, Massachusetts, and Texas. At oral argument, counsel

for Plaintiffs conceded that all these claims depend on Apple having a duty to dis-

close, such that if there is no such duty under California law, these claims similarly

5 fail. As explained above, we hold that Apple had no duty to disclose the alleged

defect at issue here.

AFFIRMED.