Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-02106/USCOURTS-cand-5_07-cv-02106-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG

United States District Court

For the Northern District of California

E-FILED on 10/10/07

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

IRENE HOEY, LANCE JONES, STEVE

GUYSHAN and CHARLES BRANNON,

Plaintiffs,

v.

SONY ELECTRONICS INC.,

Defendant.

No. C-07-02106 RMW

ORDER GRANTING DEFENDANT'S

MOTION TO DISMISS WITHOUT

PREJUDICE

[Re Docket No. 8]

Defendant Sony Electronics ("Sony") moves to dismiss plaintiffs' complaint pursuant to Fed.

R. Civ. P. 12(b)(6) and Fed. R. Civ. P. 9(b). For the reasons set forth below, the court grants the

motion.

I. BACKGROUND

Plaintiffs Irene Hoey, Lance Jones, Steve Guyshan and Charles Brannon have filed a

nationwide class action lawsuit against Sony based on an alleged defect in the Sony VAIO GRZ and

GRV series notebook computers ("VAIO notebooks"). All plaintiffs claim to have experienced

failures of their computers related to the following design defects: "(1) the solder joints of the

SODIMM sockets are prone to premature failure as a result of cyclic creep-fatigue of the solder; (2)

inadequate compliancy of the SODIMM socket leads; and (3) inadequate cooling structures causing

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG 2

severe thermal cyclic loading on the solder joints." Compl. ¶ 8. Plaintiffs contend that these defects

cause premature failure of the solder joints of the SODIMM sockets and eventually cause the

connections between the memory sockets and the mother board and between the power socket and

the mother board to fail, leaving the computers unusable. Id. at 26. Hoey, a resident of San Benito,

California, purchased a new Sony VAIO GRZ660 computer in March 2003. Id. ¶ 12. Jones, a

resident of Phoenix, Arizona, purchased a new Sony VAIO PCG-GRZ630 computer in March 2003. 

Id. ¶ 13. Guyshan, a resident of Longmeadow, Massachusetts, purchased a new Sony VAIO

GRV550 computer in April 2003. Id. ¶ 14. Brannon, a resident of Greensboro, North Carolina

purchased a new Sony VAIO GRV670 computer in June 2004. Id. ¶ 15.

Sony provides a one-year warranty on its VAIO notebooks. Plaintiffs' complaint claims that

Sony's failure to disclose the soldering defects in its VAIO notebooks that only manifested after the

expiration of the one-year express warranty was (1) fraudulent concealment resulting in (2) violation

of the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq.; (3)

violation of the California Unfair Business Practices Act, Cal. Bus. & Prof. Code §§ 17200 &

17500; and (4) unjust enrichment. Because the defect of which plaintiffs complain manifested

outside the one-year warranty period, plaintiffs' complaint does not assert a breach of contract or

breach of warranty claim. 

II. ANALYSIS

Plaintiffs assert four claims in their complaint: (1) violation of the CLRA; (2) fraudulent

concealment; (3) violation of California's Unfair Competition Law ("UCL"); and (4) unjust

enrichment. Plaintiffs seek to base their CLRA claim on the concealment by Sony of the alleged

solder defect in the VAIO notebooks, and their unjust enrichment and UCL claims are based on the

CLRA violation and fraudulent concealment claim.

A. Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) motion tests the legal

sufficiency of the claims asserted in the complaint. Dismissal can be based on the "lack of a

cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." 

Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). The issue is not whether the

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

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non-moving party will ultimately prevail but whether it is entitled to offer evidence to support the

claims asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). 

The court's review is limited to the face of the complaint, documents referenced in the

complaint, and matters of which the court may take judicial notice. Levine v. Diamanthuset, Inc.,

950 F.2d 1478, 1483 (9th Cir. 1991). When evaluating a Rule 12(b)(6) motion, the court must

accept all material allegations in the complaint as true and construe them in the light most favorable

to the non-moving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 339 (9th Cir. 1996); Barron v.

Reich, 13 F.3d 1370, 1374 (9th Cir. 1994). "While a complaint attacked by a Rule 12(b)(6) motion

to 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." Bell Atlantic Corp. v. Twombly, 530 U.S. ___, 127 S.

Ct. 1955, 1964-65 (2007) (internal citations omitted); see also Clegg v. Cult Awareness Network, 18

F.3d 752, 754-55 (9th Cir. 1994) (the court is not required to accept conclusory legal allegations

"cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the

facts alleged."). 

Federal Rule of Civil Procedure 9(b) provides: "In all averments of fraud or mistake, the

circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent,

knowledge, and other condition of mind of a person may be averred generally." See also In re

GlenFed Inc. Securities Litig., 42 F.3d 1541 (9th Cir. 1993) (en banc). "Averments of fraud must be

accompanied by the who, what, when, where, and how of the misconduct charged." Vess v.

Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). In addition, Rule 9(b) applies not only

to claims in which fraud is an essential element, but also to claims grounded in allegations of

fraudulent conduct. Id. at 1103-04 (explaining that where a plaintiff alleges a unified course of

fraudulent conduct and relies entirely on that course of conduct as the basis of a claim, the claim is

said to be "grounded in fraud" or to "sound in fraud" and the pleading of that claim as a whole must

satisfy Rule 9(b)). 

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

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B. Request for Judicial Notice

As a preliminary matter, Sony asks the court take judicial notice of the express warranty

provided for the VAIO notebooks. Plaintiffs do not appear to contest the authenticity of the

warranty, but do not appear to agree that the court may consider the warranty for purposes of the

present motion to dismiss.

Federal Rule of Civil Procedure 10(c) provides that written instruments attached to pleadings

may be considered part of the pleading. See Fed. R. Civ. P. 10(c). "Even if a document is not

attached to a complaint, it may be incorporated by reference into a complaint if the plaintiff refers

extensively to the document or the document forms the basis of the plaintiff's claim." United States

v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (citing Van Buskirk v. CNN, 284 F.3d 977, 980 (9th

Cir. 2002); Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994)). "The doctrine of incorporation

by reference may apply, for example, when a plaintiff's claim about insurance coverage is based on

the contents of a coverage plan, or when a plaintiff's claim about stock fraud is based on the contents

of SEC filings." Id. (internal citations omitted). Here, incorporation by reference of the VAIO

notebook warranty is appropriate because the allegations in plaintiffs' complaint are based directly

on the express warranty for these VAIO notebooks. Compl. ¶ 7 ("In particular, Sony represented

and warranted to Plaintiffs and all Class members that the Affected Computers were free from

defects and that they were of merchantable quality and workmanship, as evidenced by Sony's

express warranty."). Thus, the court grants Sony's request for judicial notice of the express warranty

and will consider the contents of the warranty for purposes of this motion.

C. CLRA and Fraudulent Concealment

Based on Sony's failure to disclose the soldering defect in the VAIO computers, plaintiffs

allege that Sony has violated the CLRA by (1) representing that goods have uses or characteristics

that they do not actually have, Cal. Civ. Code § 1770(a)(5); (2) representing that goods are of a

particular standard or quality when they are of another, id. § 1770(a)(7); and (3) advertising goods

with the intent not to sell them as advertised, id. § 1770(a)(9). Sony argues that plaintiffs'

allegations are insufficient as a matter of law because there has been no allegation that Sony made a

representation sufficient to trigger any of the CLRA prohibitions.

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG 5

Sony asserts that Daugherty v. American Honda Motor Co., Inc., 144 Cal. App. 4th 824

(2006), recently decided by the California Court of Appeal, is fatal to plaintiffs' claims. In

Daugherty, the Court of Appeal determined that plaintiff's CLRA claim failed because plaintiff

failed to set forth any representation by Honda regarding the claimed defect or to identify any other

duty to disclose the defect. The court held that "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." Id. at 835. Here, Sony argues that plaintiffs failed to identify a representation or duty to

disclose sufficient to state a claim for violation of the CLRA or, for that matter, fraudulent

concealment.

Plaintiffs assert that Sony has fraudulently concealed the existence of the alleged defect. 

Under California law, a claim for fraud requires the following elements: (1) misrepresentation such

as false representation, concealment or nondisclosure; (2) knowledge of falsity; (3) intent to defraud

or induce reliance; (4) justifiable reliance; and (5) resulting damage. Lazar v. Superior Court, 12

Cal.4th 631, 637 (1996). "Fraud 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, 52 Cal. App. 3d 30, 37

(1975). Here, as discussed further below, it would appear that plaintiffs have neither adequately

alleged a misleading representation by Sony nor a duty to otherwise disclose the defect.

Plaintiffs assert that their complaint sufficiently establishes a representation because they

have alleged "that Sony made affirmative misrepresentations about the computers and concealed the

truth about them." Mot. at 7 (citing Compl. ¶¶ 2-11, 24-35). However, except for one paragraph,

these allegations are entirely conclusionary. The most specific allegation is found in paragraph 7 of

the complaint, which states: "In particular, Sony represented and warranted to Plaintiffs and all

Class members that the Affected Computers were free from defects and that they were of

merchantable quality and workmanship, as evidenced by Sony's express warranty." Compl. ¶ 7.

Plaintiffs seek to bootstrap Sony's express warranty into a representation that the VAIO

notebooks are defect-free, such that a failure to disclose the alleged soldering defect would

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1

 Although the warranty states that it is only for a period of three months, the parties agree that the

warranty applies for a period of one year.

2

 Plaintiffs define the class as "All individuals and entities in the United States who purchased new

a Sony Vaio notebook computer in model series GRV or GRZ." Compl. ¶ 37.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG 6

constitute concealment. Reviewing the language of that warranty, the court finds no such

representation. The warranty states only that Sony will repair all defects for one year. Decl. of

Dean Richmond, Ex. A ("The limited warranty on your VAIO Computer covers parts and labor

against defects in material or workmanship for a period of three months from the original date of

purchase. [Sony ] warrants this computer hardware product [] against defects in material or

workmanship as follows . . .").1 Nothing in the warranty expressly or impliedly warrants that the

computer will be defect-free either during the warranty period or thereafter. Therefore, here, as in

Daugherty, the complaint fails to identify any representation by Sony that the subject computers had

any characteristic they do not have or of a standard or quality they are not. See, e.g., Daugherty, 144

Cal. App. 4th at 834. Plaintiffs argue that this case is distinguishable from Daugherty because,

unlike that case, plaintiffs have actually experienced the defects that were concealed. This

distinction is of little moment, particularly in light of the nature of the instant action: a purported

nationwide class action.2 The court concludes that as pleaded, plaintiffs' complaint fails to identify a

representation by Sony contrary to the alleged concealment.

Plaintiffs advance the theory that Sony had a duty to disclose the defect because plaintiffs

would have had the expectation that a notebook computer would operate defect-free for more than

one year. Plaintiffs acknowledge that they have not pleaded when the VAIO notebooks failed in the

present complaint but state that these allegations could be added and would support that the

computers failed before the plaintiffs would have expected. Opp'n at 2 n.1. In support of the

argument that the plaintiffs had a reasonable expectation regarding the operation of the VAIO

notebooks, plaintiffs cite Cal. Civ. Code § 1793.03(b). Plaintiffs characterize this section as creating

a "statutory presumption that electronics costing over $100 have an expected useful life of 7 years." 

Opp'n at 7. The text of § 1793.03(b) provides that manufacturers of consumer electronics will make

functional parts available to their service providers for a period of seven years past the date the

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3

 Cal. Civ. Code § 1793.03(b) reads as follows: 

(b) Every manufacturer making an express warranty with respect to an electronic or

appliance product described in subdivision (h), (i), (j), or (k) of Section 9801 of the

Business and Professions Code, with a wholesale price to the retailer of one hundred

dollars ($100) or more, shall make available to service and repair facilities sufficient

service literature and functional parts to effect the repair of a product for at least

seven years after the date a product model or type was manufactured, regardless of

whether the seven-year period exceeds the warranty period for the product

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG 7

product model or type was manufactured.3 Whatever else this section does, it not establish a

presumption that consumer electronics costing more than $100 have an expected defect-free life of

seven years. Plaintiffs' argument is unavailing. There is no authority that provides that the mere

sale of a consumer electronics product in California can create a duty to disclose any defect that may

occur during the useful life of the product. In fact, the California Supreme court has stated the

general public policy that a consumer can be "fairly charged with the risk that the product will not

match his economic expectations unless the manufacturer agrees that it will." Seely v. White Motor

Co., 63 Cal. 2d 9, 18 (1965) (stating, however, that the consumer is not charged with the bearing the

risk of physical injury when buying a product on the market); see also Bardin v. Daimlerchrysler

Corp., 136 Cal. App. 4th 1255, 1270 (2006). Thus, plaintiffs must allege more than the existence of

a warranty and a defect occurring outside the warranty period to survive Sony's motion to dismiss. 

Finally, plaintiffs argue that Sony's invocation of Daughtery is an attempt to immunize itself

against its own fraud. They contend that this runs afoul of California's law prohibiting contracts that

immunize a party as to their own fraud. Opp'n at 5 (citing Cal. Civ. Code § 1668). This argument

puts the cart before the horse: as set forth above, plaintiffs have failed to allege any representation

by Sony that its products were defect-free or that Sony had a duty to disclose the soldering defect,

thus plaintiffs have not sufficiently set forth a claim for fraudulent concealment or for a violation of

the CLRA based on such concealment.

Sony also set forth a procedural challenge to plaintiffs' CLRA claims, arguing that plaintiffs

had failed to file a venue affidavit as required by Cal. Civ. Code § 1780(c). Plaintiffs submitted the

affidavit of plaintiff Irene Hoey along with its opposition to the motion to dismiss and Sony

presented no further argument on this issue. Accordingly, it would appear that plaintiffs have

complied with the affidavit requirement set forth in § 1780(c).

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG 8

D. UCL and Unjust Enrichment

The UCL prohibits acts or practices which are fraudulent, unlawful or unfair. Plaintiffs base

their UCL claims on Sony's alleged fraudulent concealment and violation of the CLRA. As set forth

above, these claims are not adequately pleaded as set forth in the complaint. Likewise, without the

other claims, plaintiffs' claim for unjust enrichment fails, as well.

E. Rule 9(b)

Because the court does not find that the plaintiffs have adequately stated a claim for

fraudulent concealment, it need not reach Sony's motion to dismiss on the ground that the pleadings

do not satisfy the particularity requirements of Fed. R. Civ. P. 9(b). However, plaintiffs should note

that the court is not satisfied that the allegations sufficiently allege fraudulent conduct. For example,

the allegations in paragraph ¶ 9 stating, inter alia, that "Sony concealed from and/or failed to

disclose . . . the true defective nature of the Affected Computers" and that it "sold and serviced the

Affected Computers even though it knew, or was reckless in not knowing, that the Affected

Computers were defectively designed, would prematurely fail and would ultimately result in [the]

inability to use the[] Affected Computers for their intended use" are so general that the same

statement could be made of regarding any design defect in any product. The same is true of

plaintiff's allegations in ¶ 81, which assert generically that Sony was in a superior position to know

the facts about the defects, that it made "partial disclosures about the quality of the Affected

Computers while not revealing their true defective nature" and that it "fraudulently and actively

concealed the defective nature of the Affected Computers." Plaintiffs should also note that Rule

9(b) applies not only to claims in which fraud is an essential element, but also to claims grounded in

allegations of fraudulent conduct. See Vess, 317 F.3d at 1103-04. 

III. ORDER

For the foregoing reasons, the court grants Sony's motion and dismisses plaintiffs' complaint

without prejudice. Plaintiffs shall have 20 days from the date of this order to amend their complaint.

DATED: 10/10/07

RONALD M. WHYTE

United States District Judge

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE—No. C-07-02106 RMW

MAG 9

Notice of this document has been electronically sent to:

Counsel for Plaintiff:

Henry John Gutierrez hjgutierrez@lchb.com

Jonathan David Selbin jselbin@lchb.com

Counsel for Defendants:

Carter Winford Ott carter.ott@dlapiper.com

Luanne R. Sacks luanne.sacks@dlapiper.com

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 10/10/07 /s/ MAG

Chambers of Judge Whyte

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