Carideo v. Dell Inc

706 F.Supp.2d 1122

Kristin CARIDEO, et al., Plaintiffs,v.DELL, INC., Defendant.

Case No. C06-1772JLR.

United States District Court,

W.D. Washington,

at Seattle.

Feb. 12, 2010.

COPYRIGHT MATERIAL OMITTED

Anthony L. Vitullo, Fee Smith Sharp & Vitullo LLP, Dallas, TX, Beth E. Terrell, Jennifer Rust Murray, Marc C. Cote, Toby James Marshall, Terrell Marshall & Daudt PLLC, Seattle, WA, Cynthia B. Chapman, Caddell & Chapman, PC, Houston, TX, John L. Malesovas, Malesovas Law Firm, Austin, TX, Kristen E. Law, Lieff Cabraser Heimann & Bernstein, San Francisco, CA, F. Paul Bland, Trial Lawyers for Public Justice, Washington, DC, Leslie A. Bailey, Trial Lawyers for Public Justice, Oakland, CA, for Plaintiffs.

Beverly G. Reeves, Kim E. Brightwell, Paul Schlaud, Ryan Pierce, Sinead O'Carroll, Reeves & Brightwell LLP, Austin, TX, Jeffrey I. Tilden, Michael Rosenberger, Pamela J. Devet, Gordon Tilden Thomas & Cordell LLP, Seattle, WA, for Defendant.

ORDER ON MOTION TO DISMISS

JAMES L. ROBART, District Judge.

I. INTRODUCTION

This matter comes before the court on Defendant Dell Inc.'s (“Dell”) motion to dismiss (Dkt. # 103). Having considered the motion, as well as all papers filed in support and opposition, and deeming oral argument unnecessary, the court GRANTS in part and DENIES in part Dell's motion to dismiss (Dkt. # 103). The court dismisses Plaintiffs' breach of warranty and unjust enrichment claims with leave to amend within 30 days of this order.

II. BACKGROUND

This is a proposed class action involving allegedly defective Inspiron laptop computers designed, manufactured, and sold by Dell. (Am. Compl. (Dkt. # 10) ¶ 1.1.) As putative class representatives, Plaintiffs Kristin Carideo and Catherine Candler allege violations of Washington's Consumer Protection Act (“CPA”), fraudulent concealment, breach of express and implied warranties, and unjust enrichment. Plaintiffs point to three allegedly uniform and inherent defects in the computers: (1) the cooling systems are inadequate to dissipate the heat generated through normal use; (2) the power supplies prematurely fail when used as intended; and (3) the motherboards prematurely fail when used as intended. ( Id. ¶ 1.7.) They assert that Dell “made uniform material affirmative misrepresentations and uniformly concealed material information in its marketing, advertising and sale of the Affected Computers, which Dell knew to be defective, both at the time of the sale and on an ongoing basis.” ( Id. ¶ 1.4.)

Dell presented its “Terms and Conditions of Sale” (“Agreement”) to Plaintiffs at the time of their purchases. (Declaration of Mary Pape (“Pape Decl.”) (Dkt. # 15) ¶¶ 5, 6, Exs. A & B.) ¹ The Agreement includes a choice-of-law provision selecting the law of Texas to govern the Agreement and “any sales thereunder.” ( Id., Ex. A at ¶ 2.) The Agreement also includes an arbitration clause and class action waiver. ( Id., Ex. A at ¶ 13.) The court previously determined that the arbitration clause and class action waiver are unenforceable. See Carideo v. Dell, Inc. (“ Carideo III ”), No. C06-1772JLR, 2009 WL 3485933, at *6 (W.D.Wash. Oct. 26, 2009).²

Dell now moves to dismiss Plaintiffs' first amended complaint. In its motion, Dell raises legal questions regarding whether Texas law or Washington law governs the causes of action, whether Plaintiffs' claims fail as a matter of law, and whether Plaintiffs have satisfied the applicable pleading standards. Plaintiffs oppose the motion to dismiss.

III. ANALYSIS

A. Motion to Dismiss Standard

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court construes the complaint in the light most favorable to the non-moving party. Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir.2005). The court must accept all well-pleaded facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit P'ship v. Turner Broad. Sys., 135 F.3d 658, 661 (9th Cir.1998). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir.2009). “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.” Id. Dismissal under Rule 12(b)(6) can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988).

B. Applicable State Law

This action raises a host of choice-of-law and conflict-of-laws issues. Dell argues that Texas law governs Plaintiffs' causes of action while Plaintiffs assert that Washington law controls. Dell and Plaintiffs have previously explored similar issues in the course of briefing the question of the enforceability of the arbitration clause and class action waiver. They return once again to these issues, albeit on different terrain as the arbitration clause and class action waiver have now been set aside. The present choice-of-law and conflict-of-laws issues focus squarely on what law the court must apply to the merits of Plaintiffs' causes of action.

This court, sitting in diversity, applies the choice-of-law rules of Washington. See Downing v. Abercrombie & Fitch, 265 F.3d 994, 1005 (9th Cir.2001). Under Washington law, when parties dispute choice of law, there must be an actual conflict between the laws or interests of Washington and the laws or interests of another state before the court will engage in a conflict-of-laws analysis. Erwin v. Cotter Health Ctrs., 161 Wash.2d 676, 167 P.3d 1112, 1120 (2007). Absent an actual conflict, Washington law applies. Id. If a conflict exists and the parties selected the governing law, the court will enforce the choice-of-law provision unless three conditions are satisfied: (1) “if, without the provision, Washington law would apply”; (2) “if the chosen state's law violates a fundamental public policy of Washington”; and (3) “if Washington's interest in the determination of the issue materially outweighs the chosen state's interest.” McKee v. AT & T Corp., 164 Wash.2d 372, 191 P.3d 845, 851 (2008). By contrast, if a conflict exists but the parties did not select the law to govern the issue, the court will determine the controlling law under the “most significant relationship” test. Courts follow Restatement (Second) Conflict of Laws (1971) ( “ Restatement ”) section 188 for contract claims Mulcahy v. Farmers Ins. Co. of Wash., 152 Wash.2d 92, 95 P.3d 313, 317 (2004), and Restatement section 145 for tort and CPA claims Rice v. Dow Chem. Co., 124 Wash.2d 205, 875 P.2d 1213, 1217 (1994), and Schnall v. AT & T Wireless Servs., Inc. (“ Schnall I ”), 139 Wash.App. 280, 161 P.3d 395, 402 (2007), rev'd on other grounds by Schnall v. AT & T Wireless Servs., Inc. (“ Schnall II ”), 225 P.3d 929, 168 Wash.2d 125 (2010). See generally Estate of Felts v. Genworth Life Ins. Co., 250 F.R.D. 512, 522 (W.D.Wash.2008); Bybee Farms, LLC v. Snake River Sugar Co., 625 F.Supp.2d 1073, 1078 (E.D.Wash.2007).

1. The Choice-of-Law Clause Does Not Encompass Plaintiffs' Fraudulent Concealment and CPA Claims, But Does Extend to Plaintiffs' Warranty and Unjust Enrichment Claims

The court must first determine whether the scope of the choice-of-law clause contained in the Agreement extends to all, some, or none of Plaintiffs' claims. The choice-of-law clause provides:

THIS AGREEMENT AND ANY SALES THEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAWS RULES.

(Pape Decl., Ex. A at ¶ 2.) Dell argues that all of the claims fall under the choice-of- law clause while Plaintiffs contend that their fraudulent concealment and CPA claims do not. By contrast, Plaintiffs do not dispute that the choice-of-law clause encompasses their claims for breach of warranty and unjust enrichment; accordingly, the court will assume that the choice-of-law provision extends to those claims.

In Washington, “a choice of law provision in a contract does not govern tort claims arising out of the contract.” Haberman v. Wash. Pub. Power Supply Sys., 109 Wash.2d 107, 744 P.2d 1032, 1066 (1987). To determine whether the parties intended the choice-of-law clause to cover the tort and CPA claims, the court must focus on the objective manifestations of their agreement- i.e., “the actual words used”-rather than on the unexpressed subjective intent of the parties. Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wash.2d 493, 115 P.3d 262, 267 (2005); K.S. ex rel. Isserlis v. Ambassador Programs, Inc., No. CV-08-243-FVS, 2009 WL 539695, at *2 (E.D.Wash. Feb. 27, 2009).

Here, the choice-of-law clause does not expressly encompass tort and CPA claims. Unlike the expansive language of the choice-of-law clauses at issue in Brazil v. Dell Inc., 585 F.Supp.2d 1158 (N.D.Cal.2008), and Dajani v. Dell Inc., No. C08-5285 SI, 2009 WL 815352 (N.D.Cal. Mar. 26, 2009), the language of the present choice-of-law clause is relatively modest in scope and does not overtly state that the clause covers a wide range of claims, disputes, or controversies, including statutory and common law claims.³ Likewise, the language of the choice-of-law clause is substantially narrower than the language of the arbitration clause contained in the same document. ⁴

Without similarly broad language upon which to rely, Dell argues instead that the choice-of-law clause's reference to “any sales” under the Agreement is sufficiently open-ended so as to encompass all tort and CPA claims connected to the sale. (Reply (Dkt. # 106) at 15.) There is no question that Plaintiffs' fraudulent concealment and CPA claims arise...