Regueiro v. FCA US, LLC

671 F.Supp.3d 1085

Kristal REGUEIRO, on behalf of herself and others similarly situated, Plaintiff, v. FCA US, LLC, Defendants.

Case No. 2:22-cv-05521-SPG-MAR

United States District Court, C.D. California

Signed May 4, 2023

Adam Morris Rose, Emanuel M. Starr, Robert L. Starr, Law Office of Robert Starr APC, Calabasas, CA, Ari Yale Basser, Jordan L Lurie, Pomerantz LLP, Los Angeles, CA, for Plaintiff.

Alexander M. Carnevale, Hayley Nicole Landman, Thompson Coburn LLP, Los Angeles, CA, Gregory P. Gilmer, Kristyn Wong, Klein Thomas Lee and Fresard, Irvine, CA, Scott H. Morgan, Pro Hac Vice, Stephen A. D'Aunoy, Pro Hac Vice, Thompson Coburn LLP, St. Louis, MO, for Defendant.

ORDER GRANTING, IN PART, AND DENYING, IN PART, DEFENDANT'S MOTION TO DISMISS FIRST AMENDED CLASS COMPLAINT [ECF No. 22]

SHERILYN PEACE GARNETT, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant FCA US, LLC's ("Defendant") Motion to Dismiss First Amended Class Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Motion"). (ECF No. 22 ("Mot.")). Having considered the submissions of the parties in support of and in opposition to the Motion, the relevant law, the record in this case, and the arguments during the hearing on the Motion, the Court GRANTS, IN PART, and DENIES, IN PART, Defendant's Motion.

I. BACKGROUND

A. Factual Background

The First Amended Complaint ("FAC"), (ECF No. 17 ("FAC")), alleges as follows:

1. The California Emissions Warranty

In 1990, the California Air Resources Board ("CARB") submitted, and the California Legislature adopted, California Code of Regulations ("CCR") Sections 2035, et seq., which requires all vehicle manufacturers to ensure that any new motor vehicle sold in California is accompanied by a "statutorily compliant" general admissions warranty (the "California Emissions Warranty"). (Id. ¶ 2); 13 C.C.R. § 2035, et seq. To be "statutorily complaint," the emissions warranty must provide coverage for a period of three years or 50,000 miles, whichever comes first, to all defects "which cause the failure of a warranted part [or] . . . which would cause the vehicle's on-board diagnostic malfunction indicator light [("MIL")¹] to illuminate[.]" (FAC ¶ 3); 13 C.C.R. § 2037(b)(2). The CCR defines "warranted part" to mean, "[i]n the case of 1990 and subsequent model year passenger cars," a part installed by a manufacturer "which affects any regulated emission from a motor vehicle or engine which is subject to California emissions standards." (FAC ¶ 4); 13 C.C.R. § 2035(c)(3)(B). As part of the certification process for a vehicle, the vehicle's manufacturer determines which parts it considers to be "emissions parts" and submits a list of those parts to CARB. (Id. ¶ 106).

When a warranted part is "high-priced," the manufacturer must extend the emissions warranty to seven years, or 70,000 miles, whichever occurs first. (FAC ¶ 5); see 13 C.C.R. § 2037(a), (b)(3), (c). Pursuant to a vehicle's certification process, the manufacturer must also identify the parts that, based on the cost calculation set forth in the CCR, exceeds the cost limit and therefore are "high-priced" parts entitled to the extended warranty. (FAC ¶ 106). For 2008 and subsequent model year vehicles, section 2037(c) of the CCR defines a "high-priced" warranted part as either: (i) any part subject to coverage as a "warranted part" in section (b)(2); and (ii) any part that has "an individual replacement cost at the time of certification exceeding the cost limit defined in section (c)(3)." 13 C.C.R. § 2037(c)(1)(B). The "cost limit" is calculated using the following equation: Cost limit_n = $300 × (CPI_n-2 / 118.3). 13 C.C.R. § 2037(c)(3). "Cost limit_n" is the cost limit for the applicable model year of the vehicle rounded to the nearest ten dollars. Id. "n" is the model year of the new vehicles. Id. "n-2" is the calendar year two years prior to the model year of the new vehicles. Id. And "CPI" is the annual average nationwide urban consumer price index published by the United States Bureau of Labor Statistics.

Defendant is a Delaware corporation, headquartered in Michigan, that sells vehicles in California which contain valve train systems ("Class Vehicles"). See (id. ¶¶ 6-7, 41). The valve train systems contained in the Class Vehicles encompass various components, including intake valves, exhaust valves, valve guides, valve springs, valve seats, and camshafts. (Id. ¶ 7). The valve train system, with regard to the Class Vehicles' internal combustion engines, acts as a pathway for the insertion of gasoline and air into the engine's combustion chamber. (Id. ¶ 88). The valve train system is also used to "evacuate" exhaust from the combustion chamber. (Id.). In order for the Class Vehicles' engines to perform properly, the combustion chamber has to be a sealed environment. (Id.). To ensure this, intake and exhaust valves are part of the combustion chamber, which collectively make up the aforementioned valve train system. (Id. ¶ 92). The intake and exhaust valves open and close to either insert gasoline and air, or remove exhaust. (Id.).

When the valve train system is defective, causing gasoline or air to leak outside of the combustion chamber, the amount of gasoline and air igniting inside the combustion chamber is lower than intended. See (id. ¶¶ 88, 90). When this happens, a smaller explosion occurs which is not as powerful as it otherwise would be, causing an increase in regulated emissions. (Id. ¶ 91). Some of the pressure generated by the explosion may also leak along with the air and gasoline, reducing the power that is generated within the combustion chamber, thus causing an increase in regulated emissions because the leaked pressure reduces the amount of force being applied to the combustion chamber's piston.² (Id.). The leaking of gasoline and air can also cause an engine misfire, which additionally increases regulated emissions. (Id.). For these reasons, the FAC alleges that "all of the components" of the valve train system are "warranted parts" covered by the California Emissions Warranty. See (id. ¶ 12). In support of this allegation, the FAC also alleges that a June 1, 1990, report published by CARB, entitled "Emissions-Related Parts List," allegedly identifies the valve train system and its components as emissions-related parts in its Appendix B. (Id. ¶ 93, 103-05).

The FAC also alleges that the valve train system and its components are "high-priced" warranty parts. (Id. ¶ 113). For this assertion, the FAC explains that, on July 9, 2014, CARB published a "Manufacturer's Advisory Correspondence (MAC) 2014-01" ("MAC 2014"). (Id. ¶ 108). MAC 2014 "identifies the cost limit for high-priced warranted parts" for various 2015 model year passenger vehicles. (Id. ¶ 109). Per MAC 2014, the cost limit for high-priced warranted parts for the Subject Vehicle is $590.00. (Id.). The $590.00 cost limit accounts for the total cost to diagnose and replace a warranted part. (Id. ¶ 111). The FAC alleges that the replacement cost for each of the components of the valve train system exceeds $750. (Id. ¶ 113). The FAC alleges that, despite the valve train system and its components being high-priced warranted parts, Defendant has unilaterally excluded the valve train system and its component parts from being covered under Defendant's emissions warranty as "emission-related parts, "warranted parts," and "high-priced warranted parts." (Id. ¶¶ 6-14).

2. FAC's Class Allegations

Plaintiff Kristal Regueiro ("Plaintiff") is a California resident. (FAC ¶ 40). Plaintiff purchased and is the owner of a used 2015 Jeep Wrangler, VIN 1C4AJWBG5FL665112 ("Subject Vehicle"), which was originally distributed as a new vehicle by Defendant in California and originally registered in California. See (id. ¶¶ 41, 43, 52). On November 17, 2021, Plaintiff presented the Subject Vehicle for repairs to Champion Chrysler Jeep Dodge Ram ("Champion"), a Defendant-authorized repair facility located in Downey, California. (Id. ¶ 44). Plaintiff complained that the Subject Vehicle's check engine light was coming on and off. (Id. ¶ 45). A diagnostic scan found that the "P0303 OBDII fault code" was triggered, indicating a Cylinder 3 misfire, which is a condition that causes an increase in regulated emissions. (Id. ¶ 46). Champion recommended a "tear down" to correct the issue. (Id. ¶ 47). Plaintiff declined to have the repair performed and, instead, paid a $210.00 diagnostic fee out of pocket. (Id. ¶ 48). It was later diagnosed that the Subject Vehicle had a defective valve train system and required a valve job to repair. (Id. ¶ 50).

As previously stated, the FAC alleges Defendant does not classify the valve train system for the Subject Vehicle and its components as being covered under the California Emissions Warranty. (Id. ¶ 52). Further, the FAC alleges Defendant refused to cover the cost of the repair "even though the defect increased regulated emissions, the components of the Valve Train System are high-priced [warranted] parts, the vehicle had been in service for less than 7 years, and the vehicle had been driven less than 70,000 miles." (Id. ¶ 49). The FAC alleges that "Plaintiff's experience is just one of many examples of [Defendant's] scheme to avoid providing a true and comprehensive list of all parts which should be covered under either 3 years or 50,000 miles, or 7 years or 70,000 miles [under the] California Emission Warranty." (Id. ¶ 53). In particular, the FAC alleges that Defendant has systematically and, in an organized attempt to increase their profits, omitted from their warranty booklets and internal dealership literature "parts which should be identified as 'emissions-related,' 'warranted parts,' and [ ] 'high-priced' warranted parts entitled to extended statutory coverage." (Id. ¶ 56).

B. Procedural History

On August 5, 2022, Plaintiff filed the original complaint. (ECF No. 1). Thereafter, on December 14, 2022, Plaintiff filed the operative FAC. (FAC). The FAC asserts one...