Garlough v. FCA US LLC

BRIAN GARLOUGH, Plaintiff, v. FCA US LLC, a Delaware limited liability company, et al., Defendants.

No. 2:20-cv-01879-JAM-AC

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

April 19, 2021

ORDER GRANTING DEFENDANT LITHIA'S MOTION TO DISMISS AND GRANTING IN PART AND DENYING IN PART DEFENDANT FCA'S MOTION TO DISMISS

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND¹

On July 5, 2018 Brian Garlough ("Plaintiff") purchased a 2018 Dodge Demon in Texas that he had shipped to his home state of California. Second Am. Compl. ("SAC") ¶¶ 19-21; see also SAC Ex. A. One of the most prominent features of the car is the 45 square inch, air-grabber hood scoop ("hood scoop"). SAC ¶ 13. Based on information and belief, Plaintiff alleges that Defendant FCA, who marketed and produced the Dodge Demon, was aware of issues with the hood scoop but concealed this defect fromconsumers and continued to market the car. Id. ¶¶ 17, 18. Specifically, Plaintiff alleges that the hood expands, contracts, warps, and vibrates when the car is used which chips, scrapes, and cracks the original factory paint, causing damage to the car's hood, including rust. Id. ¶ 17.

In early August 2018, Plaintiff claims he noticed damage to the car caused by the hood. Id. ¶ 22. Plaintiff immediately took his car to the Lodi Dodge Dealership where he was instructed to call the hotline specific for FCA's high-end SRT cars. Id. When Plaintiff contacted the hotline, he was told to take the car back to the dealership and was informed that FCA had authorized the dealership to repaint the hood. Id. ¶ 23. However, when Plaintiff pointed out that the problem would persist, he was told to contact SRT. Id. Plaintiff contacted SRT about three times. Each time he was told FCA was working on a solution. Id. ¶ 24. When he contacted the hotline again in February 2019, he was told FCA was redesigning the hood scoop. Id. ¶ 25.

On December 4, 2019, a technical service bulletin was released that called for the replacement of the hood scoop bezel with a smaller one. Id. ¶ 27. However, Plaintiff alleges this repair is inadequate since it doesn't prevent the new hood scoop bezel from also causing damage to the hood. Id. In February 2020, Plaintiff was contacted by a repair facility which provided a quote to repaint the hood and replace the hood scoop bezel with the redesigned part. Id. ¶ 28. Plaintiff refused the repair because the facility was unable to guarantee matching paint and the quote was more than double what FCA offered to pay for the repair. Id.

Plaintiff subsequently brought this action for: (1) false advertising in violation of California law; (2) violation of the California Consumer Legal Remedies Act; (3) violation of the express warranty under the Song-Beverly Consumer Warranty Act; (4) violation of the implied warranty under the Song-Beverly Consumer Warranty Act; (5) violation of manufacturer's duties under the Song-Beverly Consumer Warranty Act; (6) unfair business practices in violation of California law; (7) violation of the Magnuson-Moss Warranty Act; (8) breach of express warranty; (9) fraudulent concealment; (10) negligent misrepresentation; (11) breach of contract; and (12) unjust enrichment. SAC at 6-19. Plaintiff's eleventh cause of action for breach of contract was brought against Lithia Motors and Lithia DMID, id. at 17, the dealership where Plaintiff purchased his car. Id. ¶¶ 5, 109-110. All the other causes of action were brought against FCA.

FCA then filed this motion to dismiss for lack of personal jurisdiction and failure to state a claim. FCA's 12(b)(2) Mot., ECF No. 23; FCA's 12(b)(6) Mot., ECF No. 24. Lithia DMID and Lithia Motors also brought a motion to dismiss for lack of personal jurisdiction and failure to state a claim. Lithia's 12(b)(2) Mot., ECF No. 29; Lithia's 12(b)(6) Mot., ECF No. 30. Plaintiff opposed these motions. Pl.'s Opp'n to FCA's 12(b)(2) Mot., ECF No. 31; Pl.'s Opp'n to FCA's 12(b)(6) Mot., ECF No. 32; Pl.'s Opp'n to Lithia's 12(b)(2) Mot., ECF No. 34; Pl.'s Opp'n to Lithia's 12(b)(6) Mot., ECF No. 35. Defendants replied. FCA's 12(b)(2) Reply, ECF No. 36; FCA's 12(b)(6) Reply, ECF No. 37; Lithia's 12(b)(2) Reply, ECF No. 38; Lithia's 12(b)(6) Reply, ECF No 39.

II. OPINION

A. Judicial Notice

FCA requested the Court take judicial notice of the warranty booklet for 2018 Dodge gas vehicles. See FCA's Req. for Judicial Notice, ECF No. 25. The Court may consider the warranty under the incorporation by reference doctrine, which permits courts to take into account documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Because Plaintiff's complaint relies on the warranty, see SAC ¶ 20, and he has not contested its accuracy, the Court may consider it. Accordingly, FCA's request is granted.

B. Personal Jurisdiction

Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes a defendant to seek dismissal of an action for a lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). Plaintiffs bear the burden of showing that jurisdiction is proper but "[w]here, as here, the motion is based on written material rather than an evidentiary hearing, plaintiff need only make a prima facie showing of jurisdictional facts." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). But "the plaintiff cannot simply rest on the bare allegations of his complaint." Id. Uncontroverted allegations in the complaint are accepted as true, and factual disputes created by conflicting affidavits are resolved in plaintiff's favor. Id.

"When no federal statute governs personal jurisdiction, thedistrict court applies the law of the forum state." Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). California's long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution. See Cal. Civ. Proc. Code § 410.10. Accordingly, California courts may exercise personal jurisdiction over a defendant so long as it comports with due process. Boschetto, 539 F.3d at 1015. "For a court to exercise personal jurisdiction over a nonresident defendant [in accordance with due process], that defendant must have at least 'minimum contacts' with the relevant forum such that the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger, 374 F.3d at 801 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). There are two kinds of personal jurisdiction a forum state may exercise over a defendant: general jurisdiction and specific jurisdiction. Boschetto, 539 at 1016.

1. General Jurisdiction

The first type of personal jurisdiction, general jurisdiction, allows a court to hear any and all claims against a defendant. Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir. 2014). A court may exercise general jurisdiction over a defendant when their affiliations with the State are so "continuous and systematic" as to render them essentially at home in the forum state. Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (internal quotations and citations omitted). For a corporation, the paradigm forum for the exercise of general jurisdiction is its place of incorporation and principal placeof business. Id. at 137. Only in an "exceptional" case will a "corporation's operations in a forum other than its formal place of incorporation or principal place of business [. . .] be so substantial and of such a nature as to render the corporation at home in that State." Id. at 139 n. 19.

While the Court did not define what such an exceptional case would be, it did cite to Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), as an example indicating "the bar for such a finding is very high." Cahen v. Toyota Motor Corp., 147 F.Supp.3d 955, 965 (N.D. Cal. 2015). Perkins involved a mining company based out of the Philippines. 342 U.S. at 447. The Court found general jurisdiction over the corporation was proper in Ohio because during the Japanese occupation of the Philippines the president was directing all of the company's activities from there. Id. at 447-448. The Court in Daimler explained that general jurisdiction was appropriate in Perkins because "[g]iven the wartime circumstances, Ohio could be considered a surrogate for the place of incorporation or head office." Daimler, 571 U.S. at 130 n. 8.

Here, FCA's place of incorporation is Delaware and its principal place of business is Michigan. SAC ¶ 2. Plaintiff relying on pre-Daimler cases argues, that despite this, FCA's contacts with California are so continuous and systematic as to render it essential at home here. Pl.'s Opp'n to FCA's 12(b)(2) Mot. at 5. The Court disagrees. There is nothing exceptional about this case that would extend general jurisdiction beyond the states where FCA is incorporated and has its principal place of business. FCA does not design, manufacture, or assemble anymotor vehicles in California. Terry Decl. ¶ 3. And its operations in this state are limited to two facilities, which, together, employ fewer than 200 people, comprising less than .32% of FCA's workforce. Id. ¶ 4. While Plaintiff also alleges Defendant markets in California and "sells and transports hundreds and thousands of cars in the State," Opp'n at 5, this does not make FCA essentially at home in California warranting general jurisdiction. See Daimler, 571 U.S. at 139 ("If [defendant's] California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which [defendant's] sales are sizable.")

Similarly, Lithia Motors' place of incorporation and principal place of business are in Oregon. SAC ¶ 3. Lithia DMID, a subsidiary of Lithia Motors, is a Texas corporation with its principal place of business in Oregon. SAC ¶ 4. Plaint...