Judge: Jon R. Takasugi, Case: 24STCV13259, Date: 2024-09-11 Tentative Ruling

Case Number: 24STCV13259    Hearing Date: September 11, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s demurrer is SUSTAINED WITH 15 DAYS LEAVE TO AMEND. Accordingly, Defendant’s motion to strike is MOOT.

            On 5/28/2024, Plaintiff Michelle Santiago (Plaintiff) filed suit against the American Honda Motor Company, alleging: (1) violation of Civil Code section 1793.2, subdivision (d); (2) violation of Civil Code section 1793.2, subdivision (b); (3) violation of Civil Code section 1793.2, subdivision (a)(3), (4) breach of the implied warranty of merchantability; and (5) fraudulent inducement—concealment.

            Now, Defendant demurrers to the fifth cause of action. Defendant also moves to strike portions of Plaintiff’s Complaint.

Discussion

            Defendant argues that Plaintiff has failed to allege sufficient facts to state a claim for fraudulent concealment. In particular, Defendant argues that the claim is preempted by federal law, is barred by the statute of limitations, and is not pled with the requisite specificity.

            As for the first contention, the Supremacy Clause of the U.S. Constitution provides that “the Laws of the United States . . . shall be the supreme Law of the Land . . ., any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” (U.S. Const. art. VI, cl. 2.) In determining whether federal law preempts state law, a court’s task is to discern congressional intent. (English v. General Elec. Co. (1990) 496 U.S. 72, 78–79.)

            Defendant argues that California does not regulate the disclosure of information sought by Plaintiff:

California has created a “Car Buyer’s Bill of Rights,” which generally speaking, affects retail vehicle sales by requiring California-licensed car dealers to disclose an itemized price list for financial items, such as warranties and insurance, and provide buyers their credit score with an explanation of how it is used. More specifically, it prohibits the advertisement of vehicles as “certified” if they are disqualified for any of the enumerated reasons, such as the odometer does not indicate the actual mileage of the vehicle, if the vehicle was reacquired under state or federal warranty law, or if title was branded as a lemon law buyback, manufacturer repurchase, salvage, junk, or similar designation. Further, Cal. Vehicle Code section 11713.12 prescribes the location and contents of the decal to be affixed to a vehicle reacquired by a manufacturer pursuant to Civil Code section 1793.22. The Car Buyer Bill of Rights does not regulate the disclosure of aggregate data pertaining to consumer complaints, repair data, or internal pre-market research.

            (Demurrer, 10: 15-11:1.)

            Moreover, Defendant argues that neither Cal. Vehicle Code sections 9950, 9951, or 9990 - 9992 regulate the disclosure of aggregate data pertaining to consumer complaints, repair data, or internal pre-market research. 

            By contrast, Defendant argues that National Highway Traffic Safety Administration (NHTSA) is charged with the following responsibilities:

 the collection and analysis of highway and motor vehicle safety data and related information (49 CFR 1.94(a)); establishing and enforcing safety standards and regulations for the manufacture and importation of motor vehicles and motor vehicle equipment; conducting research, development, and testing concerning motor vehicle safety, including vehicle-to-vehicle and vehicle-to-infrastructure technologies and other new or advanced vehicle technologies; and investigating safety-related defects and noncompliance in motor vehicles and motor vehicle equipment and administering related recalls (49 CFR § 1.94(b)); establishing requirements and carrying out programs for passenger motor vehicle information, such as the New Car Assessment Program; bumper standards for passenger motor vehicles; odometer requirements; and passenger motor vehicle theft prevention standards (49 CFR § 1.94(d)).

            (Motion, 12:21-13:9.)

In furtherance of the above, and in compliance with obligations mandated by Congress, NHTSA has developed a series of rules relating to these topics, including specifically, Early Warning Reporting. Early Warning Reporting, Foreign Defect Reporting, and Motor Vehicle and Equipment Recall Regulations: 78 Fed. Reg. 161, 51382. The Early Warning Reporting rule, establishes categories of vehicle manufacturers by size, proscribes the reporting frequency, information contained within the reports, organization of data, scope of comparison data (past nine model years), and vehicle component categories1 subject to reporting requirements. (Id. at 51383 – 51384.) “These data are referred to as aggregate data.” (Id. at 51384.)

As such, Defendant argues that NHTSA has expressly occupied the space of disclosure obligations. Moreover, Defendant argues that “were a jury to find in Plaintiff’s favor with respect to the concealment cause of action it would result in ad hoc rulemaking which would directly conflict with the specific, clear, and well-articulated rules and procedures developed by NHTSA. Regardless of the precise basis for a jury’s finding of concealment, if a manufacturer wanted to avoid committing what a jury previously determined to be fraud, it would necessarily need to modify the method and/or substance of its disclosures.” (15: 24-16:3.)

While the Court appreciates the substance of Defendant’s argument, fraudulent concealment claims are regularly brought by Song-Beverly plaintiffs in California State Courts. Defendant does not cite any case or persuasive legal authority wherein it was concluded that defect disclosure claims like Plaintiff’s were actually found to be preempted by the NHTSA. As such, the Court finds insufficient legal authority to support Defendant’s argument at this time.

As for the second contention, Defendant argues that Plaintiff’s claim is time-barred and the Plaintiff has not alleged sufficient facts to show delayed discovery. The Court agrees. Plaintiff alleges that she was unable to discover the facts underlying her claims during the limitations period, and alleges that she was a member of a class action related to her claims citing American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538, 552-556. However, before applying American Pipe tolling to a California case, the court must consider: (1) whether the class action “sufficiently put defendants on notice of the substance and nature of the plaintiff’s claims,” and (2) whether tolling would “serve to further economy and efficiency of litigation.” (Joly v. Eli Lily & Co. (1988) 44 Cal.3d 1130, 1122.) Here, Plaintiff has not alleged any supporting facts which could allow the Court to determine whether or not the class action put Defendant on notice of “the substance and nature” of this Plaintiff’s fraud and warranty claims.

Plaintiff will be afforded leave to amend to allege facts which could show her claim is not barred by the statute of limitations.

 If Plaintiff is able to, the Court notes that it will likely conclude that Plaintiff has alleged sufficient facts to state a claim. Plaintiff alleges that Defendant knew of the defective Sensing System in the Subject Vehicle, and that it concealed this fact because it knew it would sell more vehicles and would discourage Plaintiff from not purchasing the Vehicle. (Complaint ¶¶ 68.) At the pleading stage, these allegations are sufficient to state a claim for fraudulent concealment. While Defendant argues that Plaintiff’s allegations as to knowledge and intent are conclusory and insufficient, it would place a nearly insurmountable hurdle on plaintiffs if they were required to allege specific facts to show things like knowledge and intent without the benefit of discovery . This evidence is contemplated by the discovery process. Rather, at the pleading stage, Plaintiff must only allege facts which could reasonably show that Defendant possessed the requisite knowledge, based on the available facts. 

Based on the foregoing, Defendant’s demurrer is sustained, with 15 days leave to amend. Accordingly, Defendant’s motion to strike is moot.

It is so ordered.

Dated:  September    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.