Weisse v. LG Elecs., Inc.

650 F.Supp.3d 1078

Ingrid WEISSE and Loren Bullard, Plaintiffs, v. LG ELECTRONICS, INC. and LG Electronics USA, Inc., Defendants.

CIVIL NO. 21-00281 JAO-KJM

United States District Court, D. Hawai'i

Signed January 11, 2023

Kenneth S. Kasdan, Christopher K. Hikida, Sharla Ann Manley, Kasdan Turner Thomson Booth LLC, Honolulu, HI, for Plaintiffs.

Daniel Petrokas, Pro Hac Vice, Jack Shaked, Pro Hac Vice, Mohan Warusha Hennadige, Pro Hac Vice, Phoebe A. Wilkinson, Pro Hac Vice, Hogan Lovells, New York, NY, Edmund K. Saffery, Deirdre Marie-Iha, Goodsill Anderson Quinn & Stifel LLP, Honolulu, HI, for Defendant LG Electronics USA, Inc.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT LG ELECTRONICS USA, INC.'S MOTION TO DISMISS

Jill A. Otake, United States District Judge

Plaintiffs Ingrid Weisse and Loren Bullard ("Plaintiffs") bring this putative class action against Defendants LG Electronics, Inc. ("LGE") and LG Electronics USA, Inc. ("LGEUS") (collectively, "Defendants") based on allegations that Defendants manufactured and sold certain Packaged Terminal Air Conditioners ("PTACs") in the State of Hawai'i that are defective because they are prone to corrosion and unfit for use here based on Hawaii's environmental conditions. LGEUS moves to dismiss all claims with prejudice. ECF No. 45 ("Motion").

For the following reasons, the Court GRANTS IN PART and DENIES IN PART LGEUS's motion.

I. BACKGROUND

A. Factual History

Plaintiffs own condominium units in a high-rise building located at 988 Halekauwila in Honolulu, Hawai'i.¹ ECF No. 43 ¶ 7. Defendants' PTACs were installed in units in that building, including in Plaintiffs' units, sometime after June 2017. Id. ¶¶ 7-8. Pursuant to their purchase agreements, Plaintiffs were assigned any warranties related to their units; they therefore hold the LG Packaged Terminal Air Conditioner Systems Warranty associated with their PTACs. Id. ¶¶ 11-12; see also ECF No. 43-1. Under that warranty, Defendants warrant² "against defects in materials or workmanship under normal use" as follows: (a) a one-year warranty for "[a]ny part of the LGE Packaged Terminal Air-Conditioner that fails because of a defect in materials or workmanship"; (b) a five-year warranty for "[a]ny part of the sealed refrigerating system (the compressor, condenser, evaporator, and all connecting tubing) that fails because of a defect in materials or workmanship"; and (c) a warranty between the second and fifth year that covers replacement of "certain parts that fail due to a defect in materials or workmanship" covering the following parts: "fan motors, switches, thermostats, heater, heater protectors, compressor overload, solenoids, circuit boards, auxiliary controls, thermistors, frost controls, ICR pump, capacitors, varistors, and indoor blower bearing." ECF No. 43 ¶¶ 13-15 (internal quotation marks omitted); see also ECF No. 43-1 at 2; ECF No. 43-3 at 2. The warranty, however, contains an exclusion if the product malfunctions or fails due to "Operating the Product in a corrosive coastal environment, or in an environment containing corrosive chemical agents or other hazardous chemicals." ECF No. 43 ¶ 35 (internal quotation marks omitted); see also ECF No. 43-1 at 2; ECF No. 43-3 at 3-4.

Plaintiffs claim that, due to the environmental conditions in Hawai'i, including elevated atmospheric chloride levels and a tropical climate, combined with PTACs being manufactured with crevices and containing defective components, the PTACs are significantly and prematurely corroding, causing refrigerant leaks that impede the PTACs from functioning and pose a danger to human health. See, e.g., ECF No. 43 ¶¶ 3-4, 24-25, 30-31, 36. Plaintiffs further allege Defendants knew or should have known that certain PTAC models, including those installed in Plaintiffs' building, contained this inherent defect and were unfit for sale and use in Hawai'i, but nonetheless designed, marketed, sold, and/or shipped these PTACs to Hawai'i. See id. ¶¶ 25-29. For example, Plaintiffs point to the warranty exclusion for operating PTACs in a "corrosive coastal environment" as showing Defendants "were aware that a 'coastal environment' is corrosive for the LG PTAC units." Id. ¶ 35. Plaintiffs thus contend these PTACs must be replaced with other PTACs that are fit for use in the environment of Hawai'i and not subject to significant and premature corrosion. Id. ¶ 32.

Plaintiffs allege that, on April 30, 2021, they sent a warranty claim on behalf of themselves and all owners of LG PTACs in Hawai'i; however, Defendants did not respond. Id. ¶ 16; see also ECF No. 43-2.

B. Procedural History

Plaintiffs commenced this putative class action in state court in May 2021. ECF No. 1-1. LGEUS removed the action under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). ECF No. 1 at 4-15. LGEUS then moved to dismiss the initial complaint. ECF No. 15. Because the parties were pursuing mediation, the Court held that motion in abeyance. ECF Nos. 19, 20. In September 2022, Plaintiffs filed an Amended Complaint ("FAC"). ECF No. 43. The FAC asserts five claims against Defendants: breach of express warranty (Count I); violation of the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 et seq. (Count II); breach of implied warranty of merchantability (Count III); breach of implied warranty of fitness for a particular purpose (Count IV); and unfair business practices violation of [Hawai'i Revised Statutes ("HRS")] §§ 480 et seq. (Count V).³ Id. LGEUS filed its Motion to Dismiss on October 21, 2022.⁴ ECF No. 45. Plaintiffs filed an opposition, and LGEUS filed a reply. ECF Nos. 47, 48. The Court held a hearing on the Motion on December 15, 2022. ECF No. 50.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for failure to state a claim on which relief can be granted. See Fed. R. Civ. P. 12(b)(6). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citation omitted). However, a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.' " Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955) (alteration in original). A complaint must "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. This means that the complaint must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citation omitted).

III. DISCUSSION

A. Standing Related To "Crevices"

LGEUS argues — across two footnotes — that Plaintiffs lack standing to bring any claim that relies on PTACs being manufactured with crevices because Plaintiffs' have not sufficiently alleged their PTACs have crevices or how such crevices are connected to the alleged defects. ECF No. 45-1 at 7-8 n.2, 12 n.4. The Court disagrees.

"Three elements form the irreducible constitutional minimum of standing to file suit in federal court." Ctr. for Biological Diversity v. Mattis, 868 F.3d 803, 816 (9th Cir. 2017) (citation and internal quotation marks omitted). "The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Id. (internal quotation marks and citation omitted). "The injury in fact must constitute 'an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.' " Lopez v. Candaele, 630 F.3d 775, 785 (9th Cir. 2010) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)).

"Each element of standing 'must be supported with the manner and degree of evidence required at the successive stages of the litigation.' " Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 2011) (ellipsis omitted) (quoting Lujan, 504 U.S. at 561, 112 S.Ct. 2130). "At the pleading stage, general factual allegations of injury . . . may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim." Id. (brackets and internal quotation marks omitted) (quoting Lujan, 504 U.S. at 561, 112 S.Ct. 2130). The court "must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party" when "ruling on a motion to dismiss for want of standing." Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); see also Confederated Tribes & Bands of Yakama Nation v. Yakima County, 963 F.3d 982, 989 (9th Cir. 2020).

Plaintiffs allege they own certain PTACs that were installed in their condominiums, that they were assigned the warranties for those PTACs, that they seek to bring this action on behalf of "all owners of PTAC units manufactured by Defendants [LGE and LGEUS] ("LG PTAC units") and sold in the State of Hawai'i," that "[t]he LG PTAC units owned by Plaintiffs and the Class Members are significantly and prematurely corroding, and leaking refrigerant," that "LG PTAC units are manufactured with crevices that are subject to corrosion and cause refrigerant leaks," and that the corrosion results in the units failing and refrigerant leaking. ECF No. 43 ¶¶ 2, 4-7, 9-12, 27-28, 30-31; see also, e.g., id. ¶¶ 52-54 (connecting the alleged breach of express warranty to crevices subject to corrosion that cause leaks and allegations that, because of this breach, Plaintiffs' units are corroding and leaking).

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