Yesterday, in an opinion worthy of publication, the Court of Appeal (Second Appellate District, Division Five) held that the trial court had improperly sustained without leave to amend the defendant's demurrer to the plaintiffs' UCL and CLRA claims. Hunter v. General Motors, no. B190809.
The putative class action challenged the defendant's "development, design, manufacture, and sale of certain vehicles with a defective rear brake system." Slip op. at 2. The opinion addresses, among other things, the Federal Motor Vehicle Safety Standards promulgated by NHTSA. The Safety Standards are often the central focus of non-injury consumer class actions involving safety-related auto defects. This opinion is the first to interpret them in the context of UCL and CLRA claims. For example:
Plaintiffs allege that defendant violated section 1770, subdivision (a)(3) of the CLRA when it knowingly affixed a certification label or tag to each of the subject vehicles falsely stating, “This Vehicle Conforms to All Applicable U.S. Federal Motor Vehicle Safety Standards in Effect on the Date of Manufacture Show[n] above.” Defendant’s defective braking system, plaintiffs allege, violated Federal Motor Vehicle Safety Standards 105 and 135.
The trial court ruled that plaintiffs’ Federal Motor Vehicle Safety Standards allegations do not state a basis for a misrepresentation under the CLRA because they fail to allege that “the parking brake systems were not ‘capable’ of holding the subject vehicles stationary for 5 minutes in both a forward and reverse direction on a 30 percent grade, nor is there an allegation that the parking brake system did not hold the vehicle stationary for 5 minutes in both a forward and reverse direction on the grade.” The trial court’s reading of plaintiffs’ allegations is unduly narrow and inconsistent with the mandate to construe the CLRA liberally (§ 1760; Wang v. Massey Chevrolet, supra, 97 Cal.App.4th at p. 869) and to give the complaint a reasonable interpretation (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at pp. 966-967). Plaintiffs allege that the label or tag affixed to each of the subject vehicles certifying that the vehicle conformed to all effective Federal Motor Vehicle Safety Standards was false because the parking brake system was defective. Liberally construed, that allegation alleges that the parking brakes could not hold the subject vehicles as required by 49 C.F.R. part 571.105, subpart 5.2.1 and 49 C.F.R. part 571.135, subpart 7.12.3 and, accordingly, is sufficient to establish a misrepresentation under the CLRA.
Also, plaintiffs’ allegations establish a misrepresentation under the CLRA based on 49 C.F.R. part 571.135, subpart 5.6(a) which provides, in pertinent part, “[a]ll mechanical components of the braking system shall be intact and functional.” Plaintiffs allege that defendant knew that “the parking brakes on the Subject Vehicles were defective in that they did not work.” We must accept that allegation as true. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at pp. 966-967.) If the parking brakes “did not work,” then they were not “functional” as required by subpart 5.6(a), and a certification that a vehicle equipped with such parking brakes conformed to “All Applicable U.S. Federal Motor Vehicle Safety Standards in Effect on the Date of Manufacture” is an actionable misrepresentation under the CLRA.
Plaintiffs also allege that defendant violated section 1770, subdivisions (a)(5) and (a)(7) of the CLRA when defendant represented that the subject vehicles had characteristics and benefits they did not have and were a particular standard, quality, or grade they were not. In support of their CLRA cause of action, plaintiffs allege that defendant made representations about the quality, safety, and performance of the parking brake system on the subject vehicles while failing to disclose information it knew about the defect in the parking brakes. The list of proscribed practices in section 1770 includes the concealment or suppression of material facts. In the CLRA context, “[f]raud or deceit may consist of the suppression of a fact by one who is bound to disclose it or who gives information of other facts which are likely to mislead for want of communication of that fact.” (Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 37; compare with Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255 and Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 835 [“although a claim may be stated under the CLRA in terms constituting fraudulent omissions, to be actionable the omission must be contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose”].) Plaintiffs’ allegations are sufficient to state a violation of the CLRA based on defendant’s alleged representations about the parking brakes and concealment of the defect. (See Outboard Marine Corp. v. Superior Court, supra, 52 Cal.App.3d at p. 37.)
Slip op. at 12-14 (footnotes omitted). The discussion of the plaintiffs' claims under the UCL's three prongs is equally interesting, including the holding that the plaintiffs "need not wait for a catastrophic event such as brake failure to bring an action under the UCL based on the facts alleged in the fourth amended complaint." Id. at 19. I would not be surprised to see publication requests filed here.
By the way, thanks again to JS, who continues to tirelessly mine the unpublished Court of Appeal opinions and send me the gems like this one.