Andre Wong v. American Honda Motor Co., Inc.

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 14 2024

MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANDRE WONG; et al., No. 22-56113

Plaintiffs-Appellants, D.C. Nos.

v. 2:19-cv-10537-JLS-KES AMERICAN HONDA MOTOR CO., INC., 2:21-cv-04030-JLS-KES a Delaware corporation; DOES, 1 through 50, inclusive,

MEMORANDUM* Defendants-Appellees.

Appeal from the United States District Court for the Central District of California

Josephine L. Staton, District Judge, Presiding Argued and Submitted February 6, 2024 Pasadena, California

Before: WARDLAW, FRIEDLAND, and SUNG, Circuit Judges.

Twenty-one consumers who purchased Honda Civics from various dealerships (“Appellants”) appeal parts of the district court’s order dismissing their claims against American Honda Motor Co., Inc. (“Honda”). In their putative class action, Appellants asserted several claims against Honda based on the core allegations that Honda designed and manufactured various models of Honda Civics (the “Class Vehicles”) with defective air conditioning systems. The district court dismissed all claims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). On appeal, Appellants argue only that the district court erred in dismissing their implied warranty of merchantability claims and their fraud and consumer protection claims. We affirm.1

1. The district court properly dismissed the implied warranty claims, although we rest our decision on grounds that differ from the district court’s. The implied warranty claims brought under the laws of California, Connecticut, Florida, Illinois, North Carolina, Oregon, and Washington fail because those states require that a buyer establish contractual privity with a manufacturer (at least, as here, where plaintiffs allege only economic loss), and Appellants have not established contractual privity.2 Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008) (stating that, under California law, a plaintiff “must stand in vertical contractual privity” with a defendant to bring an implied warranty claim, and generally, “an end consumer . . . who buys from a retailer is not in privity with a manufacturer”); Ocana v. Ford Motor Co., 992 So. 2d 319, 325 (Fla. Dist. Ct. App. 2008) (Florida); Source One Fin. Corp. v. Rd. Ready Used Cars, Inc., No. CV136034341S, 2014 WL 1013121, at *7 (Conn. Super. Ct. Feb. 14, 2014) (Connecticut); Voelker v. Porsche Cars N. Am., Inc., 353 F.3d 516, 525 (7th Cir. 2003) (Illinois); Energy Invs. Fund, L.P. v. Metric Constructors, Inc., 525 S.E.2d 441, 446 (N.C. 2000) (North Carolina); Davis v. Homasote Co., 574 P.2d 1116, 1117-18 (Or. 1978) (Oregon); Babb v. Regal Marine Indus., Inc., 186 Wash. App. 1003, 2015 WL 786857, at *3 (Ct. App. 2015) (Washington).

Appellants argue that California, Florida, Illinois, North Carolina, and Washington recognize a “third-party beneficiary” exception to the privity requirement (or its equivalent). But even assuming that these states recognize such an exception, Appellants’ threadbare and conclusory allegations are insufficient to suggest that the exception would apply here.3

The implied warranty claims brought under the laws of the remaining states—Indiana, Michigan, Missouri, New Jersey, Pennsylvania, Texas, and Virginia—fail because Appellants have not pled a breach of the implied warranty of merchantability during the applicable warranty period. Honda’s New Vehicle Limited Warranty limits the implied warranty of merchantability to the duration of the express warranty, namely the earlier of three years or 36,000 miles. By the time the Appellants were denied a free warranty repair, this period had already lapsed.4

Appellants argue that the defect—the poor design or manufacture of the air conditioning system—existed at the time of sale, so the implied warranty of merchantability was breached at that time, which would be within the warranty period. But Appellants cite California law for that proposition, and California’s approach has been criticized for rendering “meaningless any durational limits on implied warranties.” Marchante v. Sony Corp. of Am., 801 F. Supp. 2d 1013, 1022 (S.D. Cal. 2011). Appellants have not cited any cases establishing that other states have followed California’s approach, so they have failed to show a breach of the implied warranty during the warranty period.

2. The district court properly dismissed Appellants’ fraud and consumer protection claims. The district court dismissed these claims on the ground that Appellants did not adequately allege that Honda had knowledge of the defect prior to Appellants’ purchase of the Class Vehicles in 2016, 2017, and 2018.5

To support their allegations regarding pre-sale knowledge, Appellants rely on (1) Honda’s pre-sale testing of its cars, (2) consumer complaints, (3) certain service bulletins and dealer communications, and (4) the demand for air conditioning parts and Honda’s internal data regarding repairs.6 Appellants’ allegations regarding pre-sale testing are too general and conclusory to support an inference of knowledge. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1147 (9th Cir. 2012).

The vast majority of consumer complaints were made after Appellants purchased the Class Vehicles, and the remaining complaints are too few in number to suggest Honda had knowledge of the defect. See Williams v. Yamaha Motor Co., 851 F.3d 1015, 1027 & n.8 (9th Cir. 2017).

Honda’s technical bulletins and its communications with dealerships also fail to show pre-sale knowledge. The July 2016 article undermines Appellants’ allegations because it suggests that Honda thought the air conditioning problem was caused by a different problem that would only affect a “very small quantity” of cars.7 Appellants next point to six communications from Honda to Honda dealer service providers that suggest Honda was investigating an air conditioning problem in “certain 2017 Civics” in mid-2017. But the fact that Honda was in the early stages of investigating what could have been an isolated problem is insufficient to allege knowledge.

Finally, Appellants point to the high demand for parts related to the air conditioning system, the fact that some of the parts were placed on nationwide backorder, and Honda’s access to “repair data” regarding the air conditioning systems. These allegations do not support an inference of pre-sale knowledge because they are not tethered to any specific time periods. The only specific allegation in this section is that certain parts were backordered in 2019, which is too late to establish pre-sale knowledge.

AFFIRMED.