Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_08-cv-00096/USCOURTS-azd-4_08-cv-00096-6/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Fraud

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Pamela Newport,

Plaintiff, 

vs.

Dell, Inc., et al.,

Defendants. 

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CV-08-0096-TUC-CKJ (JCG)

REPORT & RECOMMENDATION

Pending before the Court is a Motion to Dismiss filed by Defendants Dell, Inc., Dell

Products L.P., Dell Marketing L.P. and Dell USA L.P. (“Dell Defendants”) on December 12,

2008. (Doc. No. 73.) The Motion is supported by a Memorandum of Points and Authorities.

(Doc. No. 74.) Defendant Banctec joined in Dell Defendants’ Motion to Dismiss on

December 12, 2008. (Doc. No. 72.) Plaintiff filed a response on January 16, 2009. (Doc.

No. 75.) In an exhibit to the response, Plaintiff requested judicial notice of numerous

attachments. (Doc. No. 75-2.) Dell Defendants filed a reply on January 23, 2009, in which

Banctec joined. (Doc. Nos. 77, 78.) 

 Pursuant to the Rules of Practice in this Court, the matter was assigned to Magistrate

Judge Guerin for a report and recommendation. The Magistrate declined to hear oral

argument in this matter. See Mahon v. Credit Bureau of Placer County, Inc., 171 F.3d 1197,

1200 (9th Cir. 1999) (explaining that if the parties provided the district court with complete

memorandum of law and evidence in support of their positions, ordinarily oral argument

would not be required). After review, the Magistrate recommends the District Court, after

its independent review of the record, enter an order granting in part and dismissing in part

Case 4:08-cv-00096-CKJ-JCG Document 79 Filed 02/13/09 Page 1 of 16
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 The document attached to the Second Amended Complaint which Plaintiff identifies as

a written acknowledgment invoice lists August 31, 2000 as the order date and September 1, 2000

as the invoice date. (Doc. No. 67, Ex. 1.) 

2

Defendants’ Motion.

FACTUAL AND PROCEDURAL BACKGROUND

According to Plaintiff’s Second Amended Complaint, Plaintiff is a resident of

Yavapai County, Arizona who purchased a Dell computer from Dell, Inc. in September,

2000.1

 (Doc. No. 67, pg. 2.) Plaintiff purchased her computer by calling Dell and placing

an order over the telephone with a Dell sales representative. (Id., pg. 6.) At the time of

purchase, Dell, Inc., on behalf of itself and the other Defendants, warranted to Plaintiff via

its sales representative and its website that “she was entitled to onsite warranty repair service

with a live technician for the first year of her warranty period without additional

consideration” (“the Warranty”). (Id., pgs. 3, 6.) Defendant Banctec, along with Dell,

provides warranty services to purchasers of Dell computer systems, including the Warranty

at issue. (Id., pg. 4.) Defendants failed to disclose to their customers, including Plaintiff, that

there was a charge for the “standard” first year onsite Warranty. (Id., pg. 5.) Defendants also

failed to disclose to their customers, including Plaintiff, that customers had the option to

purchase the computer for less money if they chose not to have this onsite service during the

first year of the warranty period. (Id., pgs. 5-6.) After purchasing her Dell computer,

Plaintiff received a written acknowledgment invoice dated September 1, 2000 memorializing

her purchase. (Id., pg. 7.) The invoice did not list an itemized price for the one-year

Warranty or otherwise disclose to Plaintiff that there was a charge for the one-year Warranty.

(Id., pg. 7.) 

In the fall of 2007, Plaintiff discovered through an unrelated legal proceeding that

Defendants had secretly charged her for the one-year Warranty. (Id., pg. 7.) Around the

same time, Plaintiff also discovered that Defendants maintained separate, internal invoices

which list the price of each element of a customer’s purchase, including the undisclosed

charge for the one-year Warranty. (Id., pg. 7.) Plaintiff alleges that the cost of the Warranty

ranged from $30 to $120. (Id., pg. 7.) The exact cost is unknown and remains within the

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2

 It appears that Plaintiff’s common law claim for breach of express warranty is

subsumed by her claim for breach of express warranty in violation of A.R.S. § 47-2313; Title 47

of the Arizona Revised Statutes, “Uniform Commercial Code” applies to “all transactions in

goods.” See A.R.S. § 47-2102.

3

Defendants’ exclusive knowledge. (Id., pgs. 7-8.) Plaintiff’s Second Amended Complaint

alleges that plaintiff is a member of a class consisting of all persons in the state of Arizona

who have purchased desktop or notebook computer systems manufactured and sold by Dell

and who also received or purchased a Warranty from Defendants; Plaintiff alleges that all

class members received substantially identical warranties from Defendants with substantially

similar documentation and substantially similar representations and/or lack of disclosures.

(Doc. No. 67, pg. 7.) 

On November 8, 2007, Plaintiff filed a class action suit against Defendants in Pima

County Superior Court. (Doc. No. 1.) Dell Defendants removed the action to federal court

on February 1, 2008, alleging federal jurisdiction under the Class Action Fairness Act of

2005 (“CAFA”). (Id.) Plaintiff moved to remand the case back to state court; that motion

was denied. (Doc. Nos. 31, 55.) On March 13, 2008, Plaintiff amended her Complaint

(“Amended Complaint”). (Doc. No. 33.) On October 17, 2008, the district court issued two

Orders dismissing Plaintiff’s First Amended Complaint in part, and granting Plaintiff leave

to amend some of her claims. (Doc. Nos. 65 & 66.) Plaintiff’s Second Amended Complaint

alleges six claims; each claim is alleged against all Defendants: (1) consumer fraud in

violation of Arizona’s Consumer Fraud Act, A.R.S. § 44-1521, et seq.; (2) breach of express

warranty;2

 (3) breach of express warranty in violation of A.R.S. § 47-2313; (4) breach of

contract; (5) fraud, and (6) fraud by non-disclosure.

STANDARD OF REVIEW

To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which

relief can be granted, “factual allegations must be enough to raise a right to relief above the

speculative level, on the assumption that all the allegations in the complaint are true even if

doubtful in fact.” Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007) (citations and

internal quotations omitted). “While a complaint attacked by a Rule 12(b)(6) motion to

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dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the

‘grounds' of his ‘entitlement to relief’ requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do.” Id. at 1964 (citations

and internal quotations omitted). “[O]nce a claim has been stated adequately, it may be

supported by showing any set of facts consistent with the allegations in the complaint.” Id.

at 1968 (abrogating a literal reading of Conley, 355 U.S. at 45-46). Dismissal is appropriate

under Rule 12(b)(6) if the facts alleged do not state a claim that is “plausible on its face.” Id.

at 1973. When assessing the sufficiency of the complaint, all factual allegations are taken as

true and construed in the light most favorable to the nonmoving party, Iolab Corp. v.

Seaboard Sur. Co., 15 F.3d 1500, 1504 (9th Cir.1994), and all reasonable inferences are to

be drawn in favor of that party as well. Jacobsen v. Hughes Aircraft, 105 F.3d 1288, 1296

(9th Cir.1997).

DISCUSSION

Defendants argue that Plaintiff’s Amended Complaint should be dismissed in its

entirety pursuant to Rule 12(b)(6) because: (1) Plaintiff failed to cure the deficiencies in her

complaint; (2) Plaintiff cannot state her claims on behalf of a class; (3) Plaintiff has failed

to state a claim for breach of warranty; (4) Plaintiff has failed to state a claim for breach of

contract; (5) Plaintiff has failed to plead her fraud and consumer fraud claims with

particularity; and (6) Plaintiff has failed to state a claim for fraud by non-disclosure.

A. Defendants are not entitled to dismissal on the ground that Plaintiff has failed to cure deficiencies in her complaint

Plaintiff’s First Amended Complaint alleged claims against Defendants (and former

Defendant Qualxserv) for consumer fraud in violation of A.R.S. § 44-1521,false advertising,

breach of express warranty, breach of express warranty in violation of A.R.S. § 44-2313,

breach of contract, fraud, fraud by non-disclosure, restitution for unjust enrichment and

declaratory judgment. (Doc. No. 33.) The Court, in granting a motion to dismiss filed by

the Dell Defendants and in which Defendant Banctec joined, permitted Plaintiff to amend her

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 The Court’s order permitting amendment of Plaintiff’s complaint adopted a Report and

Recommendation by the Magistrate Judge. (Doc. Nos. 62 & 65.) 

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 The Court held that because Arizona does not recognize a free-standing claim for false

advertising, but treats false advertising as an element of a claim brought under Arizona’s

Consumer Fraud Act, Plaintiff’s claim for false advertising would be considered part of

Plaintiff’s claim for violation of A.R.S. § 44-1521.

5

 Plaintiff’s Second Amended Complaint does not allege that Defendants breached an

agreement to provide new, rather than refurbished, parts during repair and service.

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complaint only as to some of the counts alleged (“October 17, 2008 Order”).3 (Doc. No. 65.)

Specifically, the Court held that Plaintiff could amend her fraud claims, ie. her claims for

consumer fraud in violation of A.R.S. § 44-1521, false advertising,4

 fraud and fraud by nondisclosure. With respect to Plaintiff’s fraud claims, the Court instructed Plaintiff to comply

with Rule 9(b), Fed. R. Civ. P. by specifically alleging why Defendants’ statements were

false and how the statements were communicated to Plaintiff. The Court also held that

Plaintiff could amend her contract claims, ie. her claims for breach of express warranty,

breach of express warranty in violation of A.R.S. § 44-2313 and breach of contract. With

respect to Plaintiff’s breach of contract claims, the Court held that Plaintiff could amend her

complaint to allege that Defendants breached the Warranty in only two ways: (1) in failing

to inform Plaintiff of her right to opt-out of purchasing the Warranty, and (2) in providing

Plaintiff with refurbished, rather than new, parts during repair of Plaintiff’s computer.5

 In

the pending Motion to Dismiss, Defendants argue that Plaintiff has failed to comply with the

Court’s instructions by failing to cure her pleading deficiencies, and that this alone justifies

dismissal with prejudice of Plaintiff’s Second Amended Complaint.

1. Defendants argument is without legal merit

As a threshold matter, the Court disagrees with Defendants’ assertion that a complaint

may be dismissed solely for failure to cure deficiencies identified by the court in a prior

complaint. The previous instructions of the court are merely one factor to be considered by

the court in determining whether dismissal should be with or without leave to amend. See

Foman v. Davis, 371 U.S. 178, 182 (1962) (stating that, before dismissing a complaint

without leave to amend, the court should examine the following factors: (1) undue delay; (2)

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bad faith; (3) prejudice to the opposing party; (4) futility of the amendment; and (5) whether

the plaintiff has repeatedly failed to cure deficiencies by amendments previously allowed).

Furthermore, the case cited by Defendants in support of their argument – Grosz v. Lassen

Cmty. College Dist., 572 F.Supp.2d 1199, 1217 (E.D. Cal. 2007) – is not relevant to the

present case and does not stand for the proposition that a complaint may be dismissed solely

for failure to cure deficiencies identified by the court in a prior complaint. In Grosz, the

plaintiffs failed four times over a one-year period to properly plead the essential facts

necessary to state their claims despite ample guidance from the court regarding the

deficiencies in their complaints. Id. The court concluded that dismissal without leave to

amend was appropriate because leave to amend would prove futile, cause an undue delay in

the court's docket and prejudice defendants.

2. Plaintiff has cured the deficiencies identified in her First Amended

Complaint

In addition, as stated below, Plaintiff has corrected the deficiencies in her First

Amended Complaint that were identified by the Court in its October 17, 2008 Order.

a. Plaintiff has corrected the deficiencies identified with respect to her fraud claims

With respect to Plaintiff’s fraud claims, the Court found that Plaintiff had sufficiently

alleged that Defendants represented to her that there was no additional consideration required

for the first year Warranty. (Doc. No. 62, pg. 13.) The Court then directed Plaintiff to

include allegations as to: (1) why the statements complained of were false or misleading, ie.

“specific information stating when she was charged [and] how much she was charged;” and

(2) how the representations were made to Plaintiff. (Doc. No. 62, pgs. 14-15.) In her Second

Amended Complaint, Plaintiff sufficiently alleges these elements of her fraud claims.

According to the Second Amended Complaint, on August 31, 2000, she ordered a Dell

computer from a Dell sales representative over the telephone. (Doc. No. 67, pgs. 6-7.)

Plaintiff alleges that while ordering her new Dell computer, she was told by the Dell sales

representative that the Warranty “came standard with her computer for no additional

consideration, whereas an extension of this standard Warranty for two years cost an

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approximate additional $120.” (Id., pg. 6.) Plaintiff also saw similar representations on

Dell’s website within sixty days prior to August 31, 2000. (Id.) Plaintiff “accepted the Dell

sales representative’s offer to sell the computer and Warranty” and during the call she

provided the sales representative with her credit card in order to pay for her new Dell

computer and Warranty. Plaintiff then received a written acknowledgment of her purchase,

which itemized the “Unit Price” for the Warranty at “0.00" dollars and provided a lump sum

for the price of the computer. (Id., Ex. 1.) Plaintiff further alleged that Defendants generated

an internal invoice for the sale of Plaintiff’s computer that itemized the price of the Warranty,

but Defendants never disclosed this invoice to Plaintiff. (Id., pg. 7.) According to Plaintiff,

she believes the cost of the Warranty was between $30 and $120, but the exact price remains

within Defendants’ exclusive knowledge.

These details are responsive to the defects identified by the Court in its previous

Order. Assuming Plaintiff’s allegations to be true, Defendants’ representation that the

Warranty was available for no additional consideration was misleading, because Defendants

had identified a separate price for the Warranty that could, in theory, be deducted from the

total cost of the computer, but failed to inform Plaintiff of this option. Instead, the

information provided to Plaintiff via Dell’s website and sales representative led Plaintiff to

believe that she was receiving the Warranty free of charge. From the information provided

to Plaintiff, it could also be inferred that the Warranty had a value of $60, because Dell told

Plaintiff that she could extend the Warranty by two years for $120. (Doc. No. 67, pg. 6.)

When Plaintiff purchased her computer, with Warranty, on August 31, 2000, Defendants

generated internal records indicating that Plaintiff was charged $30-120 for the Warranty.

See Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993) (stating that the Rule 9(b), Fed.

R. Civ. P., pleading requirement is relaxed with respect to matters within the opposing party's

knowledge such that plaintiffs cannot be expected to have personal knowledge of the relevant

facts.)

b. The deficiencies identified with respect to Plaintiff’s contract claims are not relevant to the Second Amended Complaint

Defendants contend that Plaintiff failed to follow the Court’s instruction with respect

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to deficiencies in the contract claims alleged in her First Amended Complaint because

Plaintiff failed to attach a copy of her alleged contract with Dell. This argument blatantly

miscontrues the Court’s October 17, 2008 Order. The Court previously found that “Dell

Defendants are ... entitled to dismissal of those portions of Plaintiff’s contract claims arising

from Dell Defendants’ alleged breach of a warranty provision promising to use ‘new and

replacement parts and components’” because Plaintiff failed to challenge the authenticity of

the warranty document produced by Defendants, which provides that Dell may use

reconditioned parts in performing warranty repairs. (Doc. No. 62, pg. 17.) The Court

provided Plaintiff with an opportunity to amend her complaint “and provide the Court with

a copy of a warranty that is consistent with the allegations in her complaint.” (Id., pg. 18.)

In her Second Amended Complaint, Plaintiff elected to abandon her previous claim that Dell

breached its promise to use only new, rather than refurbished, parts. Instead, Plaintiff’s

Second Amended Complaint alleges contract and warranty claims arising from Plaintiff’s

contention that “Defendants promised in writing that there was no additional charge for [the

Warranty].” (Doc. No. 67, pg. 12.) Because Plaintiff’s contract and warranty claims no

longer arise from facts related to the parts used during repair and service of Dell computers,

the Court’s instruction to Plaintiff to provide a copy of the Warranty related to parts and

service is not relevant, and Plaintiffs were not required to provide the Court with a copy of

the contract alleged to be at issue.

B. Plaintiff has sufficiently plead her claims on behalf of a class

In its October 17, 2008 Order, the Court rejected Defendants’ claim that Plaintiff’s

action was completely barred by the applicable statutes of limitation. (Doc. No. 62, pgs. 5-

12.) The Court held that “for each of the claims alleged by Plaintiff, the statute of limitations

began to run when the Plaintiff discovered or with reasonable diligence could have

discovered the claim.” (Id., pg. 5.) The Court also held that “Plaintiff alleges that she

discovered in the Fall of 2007 that at the time of purchase, Defendants failed to disclose to

Plaintiff that she had the option to purchase her computer for less money without the first

year of onsite warranty service. Because her original Complaint was filed within six months

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of this discovery, each of Plaintiff’s claims survive to the extent that they allege that Plaintiff

was not advised of her ability to opt-out of the initial warranty.” (Id. at 7.) 

In the pending Motion to Dismiss, Defendants contend that Plaintiff’s invocation of

the discovery rule renders her class claims improper. According to Defendants, class

treatment is inappropriate in cases in which the discovery rule is invoked. Defendants also

contend that the Court has authority to dismiss class claims at the pleading stage if it

determines that the class claims are improper. Defendants ask the Court to strike the class

allegations pursuant to Rule 12(f), Fed. R. Civ. P., or to dismiss the class claims pursuant to

Rule 23(d)(1)(D), Fed. R. Civ. P.

In support of their contention that class treatment is inappropriate in cases in which

the discovery rule is invoked, Defendants cite to case law from other jurisdictions in which

courts have declined to certify a class on the ground that statute of limitations issues

prevented common questions from predominating over the litigation. See Doll v. Chicago

Title Ins. Co., 246 F.R.D. 683 (D.Kan. 2007); Thorn v. Jefferson-Pilot Life Ins. Co.., 445

F.3d 311 (4th Cir. 2006); Clark v. Experian Information Solutions, Inc., 256 Fed.Appx. 818

(7th Cir. 2007); and Corley v. Entergy Corp., 220 F.R.D. 478 (E.D.Tex. 2004). In each of

these cases, however, the courts found that the individualized nature of the claims prevented

class certification. See Doll, 246 F.R.D. at 687 (finding that commons questions did not

predominate because evidence before the court indicated that some class members may have

discovered the defendants’ alleged misconduct by reviewing documentation provided to them

by defendants); Thorn, 445 F.3d at 321 (holding that plaintiffs had failed to meet their burden

of proof under Rule 23, Fed. R. Civ. P. when they produced only an expert opinion stating

that generally, members of the public were unaware of defendants’ alleged misconduct);

Clark, 256 Fed.Appx. at 821-22 (holding that Illinois Consumer Fraud and Deceptive

Business Practices Act required individualized proof of deception and damages such that

class could not be certified); and Corley, 220 F.R.D. at 488 (declining to certify the class

when confronted with varying statutes of limitations from three different states and the

plaintiffs’ concession that some class members may have received actual notice of

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 Defendants argue that Plaintiff has failed to demonstrate that various class members

could not have discovered their claims earlier by asking at the time they purchased their

computers whether they could opt-out of the initial warranty. At this stage in the litigation,

however, Plaintiffs are not required to present allegations disproving every possible permutation

of Defendants’ statute of limitations defense. Defendants made a similar argument in their first

Motion to Dismiss, when they contended that Plaintiff bears the burden of proving that she could

not have discovered her claims arising from Dell's failure to notify Plaintiff of the right to

opt-out. The Court rejected that argument, noting that at this stage in the litigation, Plaintiff had

met her burden by alleging that she discovered her right to opt-out in the Fall of 2007 through an

unrelated legal proceeding and that the hidden charge for the warranty was never disclosed to

her. (Doc. No. 62, pg. 7, n. 6.) 

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defendants’ conduct, while others may not have been aware). In the present case, at this

stage in the litigation, the Court’s inquiry is limited to the allegations in the Second Amended

Complaint, which must be construed in the Plaintiff’s favor. There is nothing in the Second

Amended Complaint from which the Court can conclude that the accrual date of the class

members’ claims are so individualized as to preclude the class claims. Plaintiff alleges that

Defendants made the same representations and omissions to her and each class member.

(Doc. No. 67, pg. 8.) Plaintiff alleges that Defendants did not disclose the price of the

Warranty to Plaintiff or any class member. (Id., pg. 9.) Plaintiff alleges that she discovered

that Defendants had charged her for the Warranty in the Fall of 2007, through an unrelated

legal proceeding. (Id., pg. 7.) The reasonable inference that follows is that, to date, none of

the class members have discovered their claims. See Winkler v. DTE, Inc., 205 F.R.D. 235,

244 (D. Ariz. 2001) (rejecting argument that individualized application of statutes of

limitation prevents class certification because none of the class members could have

discovered the alleged fraud before the filing of the lawsuit). Thus, even if this Court agreed

with Defendants that application of the discovery rule can, in some instances, prevent class

certification, the Plaintiffs have nonetheless met their burden of proof at this stage in the

litigation.6

 

Furthermore, the Court does not agree with Defendants’ assertion that Plaintiff’s class

allegations should be dismissed at the pleading stage. None of the cases cited by Defendants

in support of this contention are persuasive. Doninger v. Pacific Northwest Bell, Inc., 564

F.2d 1304, 1308, 1313-14 (9th Cir. 1977) addressed the merits of a certification motion, not

a motion to dismiss. In Kamm v. California City Dev. Co., 509 F.2d 205, 213 (9th Cir. 1975),

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the Ninth Circuit affirmed the dismissal of a class action on the ground that state action had

already been commenced by with respect to the same controversy and relief had been

obtained. In Shabaz v. Polo Ralph Lauren Corp., 586 F.Supp.2d 1205, 1211 (C.D. Cal.

2008), the district court struck only those portions of the class allegations which, on the face

of the complaint, were beyond the limitations period. The court also rejected defendants’

argument that the class claims should be dismissed in their entirety for lack of commonality

and typicality because “such issues would be better dealt with at a fully briefed class

certification hearing.” In Mauro v. General Motors Corp., 2008 WL 2775004, *9, the district

court granted a motion to dismiss as to only one of several class claims, because the

complaint on its face failed to allege that class members met certain warranty requirements.

The court reserved consideration of other deficiencies in the class allegations for the class

certification stage. Thus, the Court takes issue with Defendants’ assertion that “district

courts throughout the Ninth Circuit have, in appropriate cases, dismissed class allegations

at the pleading stage.” (Doc. No. 74, pg. 12.) To the contrary, “[there is little authority on

this issue within the Ninth Circuit and other jurisdictions have made clear that] dismissal of

class allegations at the pleading stage should be done rarely and that the better course is to

deny such a motion because ‘the shape and form of a class action evolves only through the

process of discovery.’” See In re Wal-Mart Stores, Inc., 505 F.Supp.2d 609, 615

(N.D.Cal.2007) (citations omitted); see also Beauperthuy v. 24 Hour Fitness USA, Inc., 2006

WL 3422198, * 3 (N.D. Cal. 2006) (“Rule 23(d)(4), Fed. R. Civ. P. “applies to class actions.

. . . As the Court has yet to address whether the part of Plaintiffs' action brought under Rule

23 may proceed as a class action, Rule 23(d)(4) has no application to the present situation

before it.” (citing Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 1795)).

C. Plaintiff has failed to state a claim for breach of warranty

In Counts 2 and 3, Plaintiff alleges that Defendants “made express affirmations of fact

... that there was no additional charge for onsite warranty service and parts for the first year

... of the warranty period.” (Doc. No. 67, pgs. 12-14.) According to Plaintiff’s Second

Amended Complaint, Defendants breached this Warranty by secretly charging Plaintiff and

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 Although Plaintiff alleged the same breach of express warranty claims in her Complaint

and First Amended Complaint, Defendants did not argue in either of their previous Motions to

Dismiss that Plaintiff had failed to state a claim with respect to her breach of express warranty

claims because Dell’s alleged representations did not constitute warranties. If a party makes a

Rule 12(b)(6) motion for failure to state a claim, but omits a defense or objection then available,

the party may not raise that defense or objection in a subsequent Rule 12(b)(6) motion. See

Fed.R.Civ.P. 12(g). Rather, the party may raise the defense in its answer, by motion for

judgment on the pleadings, or at the trial on the merits. Id. at 12(h)(2). However, courts have

discretion to hear a second motion under Rule 12(b)(6) if it is “not interposed for delay and the

final disposition of the case will thereby be expedited.” See Aetna Life Ins. Co. v. Alla Medical

Svcs., Inc., 855 F.2d 1470, 1475 n.2 (9th Cir.1988).

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the class members for the Warranty. Defendants contend that Plaintiff has failed to state a

claim for breach of express warranty because Dell’s alleged representations do not constitute

a warranty under Arizona statute or common law.7

 

A.R.S. § 47-2313(A)(1) provides that “Express warranties by the seller are created as

follows: . . . Any affirmation of fact or promise made by the seller to the buyer which relates

to the goods and becomes part of the basis of the bargain creates an express warranty that the

goods shall conform to the affirmation or promise.” A.R.S. § 47-2313(B) specifically states

that “an affirmation merely of the value of the goods . . . does not create a warranty.” In the

present case, the “warranty” alleged by Plaintiff is a warranty as to the value of the one-year

Warranty, ie. that Defendants affirmed to Plaintiff that the Warranty was free of charge.

Under the plain language of A.R.S. § 47-2313(B), Defendants’ alleged claim that the

Warranty was free of charge does not qualify as a “warranty” within the meaning of A.R.S.

§ 47-2313(A)(1). See Committee for Preservation of Established Neighborhoods v. Riffel,

141 P.3d 422, 424 (Ariz. App. 2006) (“In interpreting statutes, we look to the plain language

as the most reliable indicator of meaning.”). Accordingly, the Court recommends dismissal

of Plaintiff’s breach of express warranty claims.

D. Plaintiff has sufficiently stated a claim for breach of contract

Defendants contend that Plaintiff has failed to state a cause of action for breach of

contract because she has not specifically identified the contract or the mutual performance

of the parties. In so arguing, Defendants take an impermissible second bite at the apple. In

their previous Motion to Dismiss, Defendants argued that Plaintiff’s breach of contract claim

must fail because Plaintiff had failed to allege each material part of the contract. (Doc. No.

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8

 As stated in section A(2)(b), above, the Court granted Dell Defendants’ motion to

dismiss only as to those portions of Plaintiff's contract claims arising from Dell Defendants'

alleged breach of a warranty provision promising to use “new and replacement parts and

components” because Plaintiff failed to challenge the authenticity of the warranty document

produced by Defendants, which provides that Dell may use reconditioned parts in preforming

warranty repairs. 

9

 This is not to say the Court believes that Plaintiff will prevail on her breach of contract

claim. If evidence demonstrates that the only promise made by Defendants to Plaintiff was that

Defendants would include the Warranty “at no additional consideration,” and Plaintiff paid no

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45, pgs. 14-15.) The Court largely rejected Defendants’ argument,8 stating that “even if

Plaintiff is required under Arizona law to allege the substantive terms of her contract with

Dell Defendants, she has done so in Paragraphs 44 and 53 of her Amended Complaint.”

(Doc. No. 62, pg. 17.) Thus, the Court has already considered and rejected this claim by

Defendants.

Furthermore, Defendants argument is without merit when considered in light of the

allegations plead in Plaintiff’s Second Amended Complaint. “To bring an action for the

breach of the contract, the plaintiff has the burden of proving the existence of the contract,

its breach and the resulting damages.” Graham v. Asbury, 540 P.2d 656, 657 (Ariz. 1975).

“[F]or an enforceable contract to exist, there must be an offer, acceptance, consideration, and

sufficient speculation of terms so that the obligations involved can be ascertained.” Savoca

Masonry Co. v. Homes and Son Constr. Co., 542 P.2d 817, 819 (Ariz. 1975). Plaintiff

alleges that Defendants promised purchasers of Dell computers that a one-year warranty was

included with purchase and that purchasers would not be charged for the one-year warranty.

(Doc. No. 67, pg. 6.) The promise of a free one-year warranty was memorialized in several

writings, including the acknowledgment invoice sent to Plaintiff after she purchased the

computer and Dell Defendants’ website. (Id. at pgs. 6-7.) Thus Plaintiff has alleged the offer

and its terms. Plaintiff accepted Defendants’ offer and purchased the computer; thus Plaintiff

has alleged her acceptance and consideration. (Id.) According to Plaintiff, Defendants failed

to honor its promise by secretly charging her for the Warranty; thus Plaintiff has alleged the

breach. (Id. at pg. 7.) As a result, Plaintiff paid the hidden cost of the one-year warranty;

thus Plaintiff has alleged her damages.9

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amount for her Warranty beyond the overall purchase price of her computer, then it could be

argued that Plaintiff received the benefit of the bargain – a computer and a one-year warranty for

the advertised price. 

10 For the reasons stated in footnote 7, the Court will consider this argument despite the

fact that Defendants could have, but did not, raise the argument in their previous Motions to

Dismiss. 

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E. Plaintiff has failed to plead her fraud and consumer fraud claims with particularity

Defendants argue that Plaintiff’s statutory and common law misrepresentation claims

should be dismissed because Plaintiff has failed to cure the deficiencies identified in her First

Amended Complaint. For the reasons stated in section A(2)(a), above, the Court disagrees.

Plaintiff’s misrepresentation claims as alleged in Counts 1 and 5 of her Second Amended

Complaint comply with Rule 9, Fed. R. Civ. P. 

F. Plaintiff has failed to state a claim for fraud by non-disclosure

Defendants contend that Plaintiff cannot state a claim for fraud by non-disclosure

(Count 6) because Plaintiff has failed to allege that Defendants owed her a duty to disclose

or that Dell’s non-disclosure was material to Plaintiff’s purchase.10

In order to state a claim for fraud by non-disclosure, Plaintiff must allege that (1)

Defendants failed to disclose a material fact and (2) Defendants had a duty to disclose. See

Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons Local, 38 P.3d 12,

34 n.22 (Ariz. 2002) (citing RESTATEMENT (SECOND) OF TORTS § 551). Plaintiff has

sufficiently alleged the elements of her claim. According to the Second Amended

Complaint, the omitted “fact” at issue is Plaintiff’s allegation that the Warranty cost $30-120.

Plaintiff alleges that Defendants failed to disclose the true cost of the Warranty, representing

instead that the Warranty was available to purchasers free of charge. 

Defendants contend that the Warranty price would not have been material to

Plaintiff’s purchase of the computer, which cost $1,500. See RESTATEMENT (SECOND) OF

TORTS § 551, cmt. j (stating that a fact is “material” if it “goes to the basis, or essence, of the

transaction, and is an important part of the substance of what is bargained for or dealt with.”).

As Plaintiff points out, however, the transaction at issue is not Plaintiff’s purchase of the

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11 Defendants contend that Plaintiff could have determined the price of the Warranty if

she had asked. Such an argument necessarily relies on evidence outside the pleadings, and is not

properly before the Court on this Motion. Moreover, a purchaser does not need to ask a seller

about a material fact in order to invoke that seller’s duty to disclose. See, e.g., Hill v. Jones, 725

P.2d 1115 (Ariz. App. 1986) (where a fact is not material, duty to disclose may arise where

buyer makes an inquiry of the seller). In addition, the Court rejects this argument for the same

reasons it rejected a similar argument by Defendants, as stated in footnote 6.

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computer as a whole, but her unknowing purchase of the Warranty itself. The price of the

Warranty would be an essential, material part of that transaction. See Moore v. Mark, 475

P.2d 746, 749 (Ariz. App. 1970) (“A sale is the transfer of the property in a thing for a price

in money. The transfer of the property in the thing sold for a price is the essence of the

transaction.”) 

Furthermore, Plaintiff has sufficiently alleged that Defendants owed Plaintiff a duty

to disclose the true price of the Warranty. A duty exists “where one party has special

knowledge of material facts to which the other party has no access.” Wells Fargo, 38 P.3d

at 22. Plaintiff alleges that the exact cost of the Warranty “is presently unknown to Plaintiff

and remains within Defendants’ exclusive knowledge.” (Doc. No. 67, pgs. 7-8.) Thus,

Plaintiff has sufficiently plead facts which, if true, demonstrate that Defendants owed a duty

to Plaintiff because Defendants knew the price of the Warranty (a material term of the

transaction) and Plaintiff had no access to that information.11 

G. Plaintiff should not be granted leave to amend

In sum, the Magistrate Judge recommends that Defendants’ Motion to Dismiss be

denied with one exception: the Court agrees with Defendants that Plaintiff has failed to state

a claim for breach of warranty in Counts 2 and 3. The Magistrate Judge recommends that

Counts 2 and 3 be dismissed from the Second Amended Complaint with prejudice. 

In considering whether to dismiss a complaint without leave to amend, the Court

considers five factors: (1) undue delay; (2) bad faith; (3) prejudice to the opposing party; (4)

futility of the amendment; and (5) whether the plaintiff has repeatedly failed to cure

deficiencies by amendments previously allowed. See Foman, 371 U.S. at 182. The Court

finds that Plaintiff did not act in bad faith in pleading her claims for breach of express

warranty, but that the other factors weigh in favor of dismissal with prejudice. Further

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amendment by Plaintiff would cause undue delay and prejudice to Defendants. In addition,

Plaintiff has already amended her complaint three times. Finally, further amendment of

Plaintiff’s complaint would be futile: Plaintiff cannot state a claim under Arizona law for

breach of warranty unless she can allege that Defendants made a promise to Plaintiff relating

to “goods” rather than “value.” The multiple amendments of Plaintiff’s complaint have made

it clear that Plaintiff’s only claims against Defendants relate to Defendants alleged

misrepresentation that the Warranty was provided at no additional consideration. For the

reasons stated in section C, this is not a warranty of goods but merely an assertion as to

value, which is not actionable as a breach of warranty claim.

RECOMMENDATION

The Magistrate Judge recommends the District Court, after its independent review of

the record, enter an order GRANTING IN PART and DENYING IN PART Defendants’

Motion to Dismiss. (Doc. No. 73.)

The Magistrate Judge recommends dismissal of the claims against Defendants for

breach of express warranty and breach of express warranty in violation of A.R.S. § 47-2313.

The Magistrate Judge further recommends that such dismissal be with prejudice.

Pursuant to 28 U.S.C. § 636(b), any party may serve and file written objections within

10 days of being served with a copy of this Report and Recommendation. If objections are

not timely filed, they may be deemed waived. If objections are filed, the parties should use

the following case number: CV-08-0096-TUC-CKJ.

DATED this 13th day of February, 2009.

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