Shuman v. SquareTrade Inc.

MICHAEL SHUMAN, et al., Plaintiffs, v. SQUARETRADE INC., Defendant.

No. 20-cv-02725-JCS

United States District Court, N.D. California

November 3, 2021

ORDER GRANTING MOTIONS TO DISMISS, DENYING MOTION FOR SUMMARY JUDGMENT

Re: Dkt. Nos. 63, 64, 67

JOSEPH C. SPERO, Chief Magistrate Judge

I. INTRODUCTION

This putative class action was initiated by Plaintiff Michael Shuman, who alleges that Defendant SquareTrade, Inc. (“SquareTrade”), which sells service contracts for the protection of consumer goods, consistently fails to provide consumers with the full terms and conditions of the contract at the time of purchase and systematically pays reimbursement in an amount that is less than the purchase price of the covered item when claims are filed. After the Court granted in part and denied in part SquareTrade's motion to dismiss, dkt. 47, a First Amended Class Action Complaint (“FACC”) was filed adding Tommy Gonzales and Kathleen Abbott as plaintiffs. Presently before the Court are motions to dismiss the claims of the two new plaintiffs under Rule 12(b)(6) of the Federal Rules of Civil Procedure (dkt. 63 (“Gonzales Motion”); dkt. 64 (“Abbott Motion”)) and a motion for summary judgment on Plaintiff Michael Shuman's remaining claims (“Shuman Motion”). A hearing on the motions was held on October 29, 2021 at 9:30 a.m. The Court's rulings are set forth below.^[1]

II. BACKGROUND

A. Michael Shuman^[2]

In the original complaint, Shuman asserted claims under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq., the Song-Beverly Consumer Warranty Act, Cal. Civ. Code § 1790, and California's Unfair Competition Law (“UCL”) (Cal. Bus. & Prof. Code § 17200, et seq.). He also asserted claims for breach of contract and unjust enrichment. In response to SquareTrade's motion to dismiss, Shuman stipulated to the dismissal of the Magnusson-Moss Warranty Act and Song-Beverly Consumer Warranty Act claims. See dkt. 47 at 1. The Court granted SquareTrade's motion to dismiss as to the UCL claim, finding that Pennsylvania law rather than California law governed Shuman's claims. Id. at 7-11. It denied SquareTrade's motion as to the unjust enrichment claim, concluding that while an unjust enrichment claim cannot be established where there is an express contract that covers the same subject matter, Shuman could plead the two theories in the alternative. Id. at 11-12.

SquareTrade now seeks entry of summary judgment as to Shuman's two remaining claims, for breach of contract and unjust enrichment. Shuman Motion at 1. The primary argument SquareTrade advances in its summary judgment motion is that Shuman's claims fail because they are premised on the allegation that SquareTrade promised him that he would receive the purchase price of his bag if he filed a claim under the protection plan and there is no evidence that such a promise was ever made to Shuman, either in writing or orally. Id. To the contrary, SquareTrade contends, Shuman's deposition testimony confirms that the sales clerk who sold Shuman the protection plan told him the plan covered repair or replacement and that he would be “made whole” if he filed a claim but said nothing about reimbursement. Id. at 4-5 (citing Declaration of George Langendorf (“Langendorf Decl.”), Ex. A (Shuman depo.) at 125-126, 165-166, 180). Shuman further testified that he understood that “made whole” meant repair, replacement or reimbursement and that payment of the replacement cost was a way to make him whole.

Langendorf Decl., Ex. A at 180.

Plaintiffs do not dispute that neither the sales clerk who sold Shuman the SquareTrade protection plan nor the brochure he was given after he purchased the plan expressly promised that he would be paid the full purchase price. They contend, however, that SquareTrade's argument fails because it mischaracterizes the theory of his breach of contract claim, arguing that “the complaint makes clear that SquareTrade can provide product protection in three forms (repair, replacement, or reimbursement), and that since replacement is one of those options, any reimbursement amount can be equal to either purchase price or replacement price (if the latter is cheaper).” Opposition at 7. Plaintiffs assert that “[t]his description of SquareTrade's obligation is stated explicitly in the complaint's breach-of-contract cause of action[, ]” which alleges that “SquareTrade offered Plaintiffs and Class members product protection that provided reimbursement of purchase price (or reimbursement of the cost of replacing the product), repair, or replacement . . . .” Id. (quoting FACC ¶ 92) (emphasis added in Opposition brief). Plaintiffs further contend SquareTrade's argument that Shuman was not promised he would receive the purchase price has no bearing on his unjust enrichment claim, which does not depend on any contractual obligation on the part of SquareTrade. Id.

In its reply brief, SquareTrade argues that Shuman is trying to “pivot” to a new theory to avoid summary judgment, which should not be permitted because it would be unfair and prejudicial to SquareTrade at this stage of the case. Reply at 2. Even if the Court were to allow this new theory, SquareTrade contends, it fails because Shuman “has not alleged that his bag was not available to be purchased for the amount he received from SquareTrade.” Id. Finally, SquareTrade requests that if the Court allows Shuman to go forward based on his “new theory” it at least hold that there is no disputed issue of material fact that Shuman was not promised his purchase price.” Id.

B. Tommy Gonzales

The FACC makes the following factual allegations as to Plaintiff Tommy Gonzales:

51. On August 16, 2020, Plaintiff Tommy Gonzales purchased a belt sander online for $38, and a SquareTrade Protection Plan for the sander for $4.99. Plaintiff Gonzales purchased the belt sander and SquareTrade Protection Plan on eBay, from his home in Bakersfield, California.

52. To purchase the SquareTrade Protection Plan for the sander, Plaintiff Gonzales clicked a box on the product webpage for the sander to add a “1-year protection plan from SquareTrade - $4.99” to his purchase. Plaintiff Gonzales then proceeded to the “Buy It Now” page.

53. The webpage depicting Plaintiff Gonzales' shopping cart, before he finalized the transaction, included the belt sander and the Protection Plan, which was named “1-year SquareTrade Warranty (Home Improvement, $30-39.99).” On that webpage, Plaintiff Gonzales clicked on the product link for the SquareTrade Protection Plan. The link took Plaintiff Gonzales to a page describing the Protection Plan, promising his sander would be “covered, ” subject to “protection from common malfunctions, ” and that the coverage would include “100% parts and labor” and “no deductibles.”

54. Consistent with the content on the eBay website described above, Plaintiff Gonzales reasonably believed that his SquareTrade Protection Plan would cover the full purchase price of the sander if the device malfunctioned within the year and could not be repaired or replaced.

55. In late November 2020, Plaintiff Gonzales' sander overheated and ceased functioning.

56. At this time, Plaintiff Gonzales visited SquareTrade's website for the first time to try to file a claim online. Plaintiff Gonzales was unable to successfully file a claim online, and called SquareTrade customer service for help. A SquareTrade customer service representative told Plaintiff Gonzales to search his email for information to file his claim. Plaintiff Gonzales did not recall previously receiving any emails regarding his SquareTrade Protection Plan. When he searched his email at the advice of the customer service representative, he still could not find any emails regarding the Protection Plan.

57. Plaintiff Gonzales called SquareTrade's customer service line again, noting he could not find any relevant information regarding his Protection Plan but still wanted to file a claim. At this time, a SquareTrade customer service representative told Plaintiff Gonzales that SquareTrade would process the claim based on the information he had conveyed by phone.

58. Plaintiff Gonzales called SquareTrade customer service a third time approximately one week later, asking for an update regarding his claim status because he had received no further updates. On this call, Plaintiff Gonzales was told that his claim had been processed and approved, but that his resolution would be “pro-rated” to only $32.64 - 85.8% of the product's original purchase price ($38) - to account for depreciation. Plaintiff Gonzales was told this was pursuant to a Fast Cash program. Plaintiff Gonzales responded that he thought the SquareTrade Protection Plan promised “100% protection” of his purchase price. The customer service representative responded to Plaintiff Gonzales that the Protection Plan did not work like that, and that this was the only option available to Plaintiff Gonzales.

59. At no time was Plaintiff Gonzales offered an opportunity for repair, replacement, or alternative reimbursement options as a resolution to his claim, nor was he informed that should the amount provided be insufficient to secure a replacement that SquareTrade would provide a supplemental payment.

60. Plaintiff Gonzales was dissatisfied with this resolution and did not believe it was consistent with what he had been promised under the Protection Plan. Plaintiff Gonzales also did not understand or receive an explanation for the amount of the sander's depreciation when his sander had broken only months after purchase. However, given the customer service representative's firm response that this reduced reimbursement was his only option under the Protection Plan, Plaintiff Gonzales felt compelled to accept it.

61. In mid to late January 2021, Plaintiff

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