Yesterday's Daily Journal had a focus article (subscription) by Jeffrey L. Fazio called “‘Honda’ Discord.” The article addresses Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), and responds to another recent Daily Journal article on the Daugherty case. An excerpt:
In an article titled "Limited Liability," which ran in the Daily Journal on March 22, the authors told of a "conundrum that could be explained with the well-worn phrase 'only in California.'" The "conundrum" was the specter of a product manufacturer being held liable for defrauding consumers merely "because it did not tell them that someday the product will wear out, break, or fail[.]" ....
But there's a problem with the characterization of the issues in Daugherty and the other case discussed in the article, Chamberlan v. Ford Motor Co., 223 F.R.D. 524 (N.D. Cal. 2004): The plaintiffs never sought any such thing in either of those cases. ....
... [A]t least for now, the lesson to be learned from Daugherty is that plaintiffs proceeding under a concealment theory must be vigilant about pleading facts that establish a disclosure duty that is independent of the CLRA and the UCL themselves.
According to Daugherty, one way to do this is by demonstrating the existence of a safety concern, or a violation of an independent duty to disclose. For example, establishing a violation of California's Secret Warranty Law, Civil Code Sections 1795.90-1795.93, would trigger such a duty. Alternatively, a plaintiff can show that the defendant had exclusive access to the concealed facts and/or actively concealed the facts that gave rise to the lawsuit. 5 Bernard E. Witkin, Summary of California Law, Torts Sections 793, 796-97 (10th ed. 2005). The Daugherty court found that the plaintiffs had not pled facts to support any of these theories.
Daugherty took two statutes that serve as the bulwark against deceptive and unfair business practices and transformed them into a statutory version of the common law — which is directly contrary to legislative intent. Yet lawyers who defend manufacturers tout Daugherty as a victory for common sense by constructing an argument that has nothing to do with the issues that were actually litigated. To paraphrase a hackneyed expression, "only in 21st Century America" could this be spun as a positive development in consumer-protection law.
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