Court Opinion

ID: 9363236
Source: CourtListenerOpinion
Date Created: 2023-01-13 18:58:08.283135+00
Date Added: 2024-06-11T17:15:30.107853
License: Public Domain

UNITED STATES COURT OF APPEALS                    FILED
                         FOR THE NINTH CIRCUIT                      DEC 21 2022
                                                                MOLLY C. DWYER, CLERK
                                                                  U.S. COURT OF APPEALS
TIMOTHY G. RILEY,                          No.   20-15882

              Plaintiff-Appellant,         D.C. No. 3:17-cv-02897-CRB
                                           Northern District of California,
 v.                                        San Francisco

VOLKSWAGEN GROUP OF AMERICA,               ORDER
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

LUKE G. SANWICK; KATHRYN                   No.   20-15884
SANWICK,
                                           D.C. No. 3:17-cv-03032-CRB
              Plaintiffs-Appellants,

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

RICHARD V. ORTIZ; VIRGINIA TORRES No. 20-15885
ORTIZ,
                                   D.C. No. 3:18-cv-06951-CRB
            Plaintiffs-Appellants,

 v.
VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

JULIA ROBERTSON,                           No.   20-15886

              Plaintiff-Appellant,         D.C. No. 3:18-cv-06956-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

BYRON CLENDENEN,                           No.   20-15887

              Plaintiff-Appellant,         D.C. No. 3:18-cv-07040-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

SCOTT SALZER,                              No.   20-15889

              Plaintiff-Appellant,         D.C. No. 3:18-cv-07050-CRB

                                      2
 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

               Defendants-Appellees.

KENNETH J. COON; MARIA E. COON,               No.   20-15890

               Plaintiffs-Appellants,         D.C. No. 3:18-cv-06966-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

               Defendants-Appellees.

Before: GOULD and COLLINS, Circuit Judges, and EZRA,* District Judge.

      The memorandum disposition in the above-captioned matter filed on

October 18, 2022, is amended as follows:

      On page 4, footnote 1, change  to < filed concurrently with the original memorandum disposition>.

      *
             The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.

                                        3
      On page 4, replace  with .

      On page 5, replace 37 Cal. App. 4th 1291, 1296 (Ct. App. 1995).> with Cal. Civ. Code § 1791.1(a).

“[T]he plain language of section 1791.1 provides that goods which fail to meet any

of the four conditions listed therein are in breach of the implied warranty” under the

Act. DeNike v. Mathew Enter., Inc., 76 Cal. App. 5th 371, 384 (2022), review denied

(June 15, 2022). The first two conditions “overlap to some degree” and “fitness for

the ordinary purpose” “is shown if the product is in safe condition and substantially

free of defects. Thus, a new car need not be perfect in every detail; rather, its implied

merchantability requires only that a vehicle be reasonably suited for ordinary use.”

Brand v. Hyundai Motor Am., 226 Cal. App. 4th 1538, 1546 (2014), as modified on

denial of reh'g (July 16, 2014) (internal citation and quotation omitted).>.

                                           4
      On page 5, after  insert .

      On page 5, after  in a new paragraph insert 55 Cal. App.

5th 305, 320 (2020) (citation omitted). Likewise here, marketing promises and an

emissions compliance sticker under the hood of the car are not labels under the

implied warranty provision of the Song-Beverly Act, especially since the Appellants

never saw the compliance stickers. See id. Thus, the cars do not qualify for relief

under the Song-Beverly Act. We affirm the district court’s dismissal of this claim.>.

                                           5
      On page 6, footnote 2, change  to < we

need not and do not address>.

      On page 6, after the sentence  add the sentence .

      On page 9, change  to .

      With these amendments, the panel unanimously voted to deny the petition

for panel rehearing. The petition for rehearing is DENIED. No future petitions

for rehearing or rehearing en banc will be entertained.

      IT IS SO ORDERED.

                                         6
                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       DEC 21 2022
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

TIMOTHY G. RILEY,                               No.    20-15882

                Plaintiff-Appellant,            D.C. No. 3:17-cv-02897-CRB

 v.
                                                AMENDED MEMORANDUM*
VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

                Defendants-Appellees.

LUKE G. SANWICK; KATHRYN                        No.    20-15884
SANWICK,
                                                D.C. No. 3:17-cv-03032-CRB
                Plaintiffs-Appellants,

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

                Defendants-Appellees.

RICHARD V. ORTIZ; VIRGINIA TORRES No.                  20-15885

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
ORTIZ,
                                           D.C. No. 3:18-cv-06951-CRB
              Plaintiffs-Appellants,

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

JULIA ROBERTSON,                           No.   20-15886

              Plaintiff-Appellant,         D.C. No. 3:18-cv-06956-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

BYRON CLENDENEN,                           No.   20-15887

              Plaintiff-Appellant,         D.C. No. 3:18-cv-07040-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

                                       2
              Defendants-Appellees.

SCOTT SALZER,                               No.   20-15889

              Plaintiff-Appellant,          D.C. No. 3:18-cv-07050-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

KENNETH J. COON; MARIA E. COON,             No.   20-15890

              Plaintiffs-Appellants,        D.C. No. 3:18-cv-06966-CRB

 v.

VOLKSWAGEN GROUP OF AMERICA,
INC., DBA Volkswagen of America, Inc., a
New Jersey corporation; VOLKSWAGEN
AG,

              Defendants-Appellees.

                 Appeal from the United States District Court
                   for the Northern District of California
                 Charles R. Breyer, District Judge, Presiding

                  Argued and Submitted December 10, 2021
                          San Francisco, California

                                       3
Before: GOULD and COLLINS, Circuit Judges, and EZRA,** District Judge.

      These appeals arise from nationwide litigation related to emissions defeat

devices installed in certain Volkswagen and Audi vehicles. Appellants bought or

leased these vehicles and opted out of related class action litigation to assert their

claims individually. Appellants appeal the district court’s determination that they

did not qualify for relief under the Song-Beverly Consumer Warranty Act because

the cars were “merchantable.” Appellants also contest the district court’s rulings

during and after the trial rejecting their California Legal Remedies Act (“CLRA”)

claims. Appellants further challenge certain evidentiary rulings made by the

district court. Appellants finally challenge the district court judge’s decision not to

recuse himself. We discuss each argument in turn.1

      1. The district court granted summary judgment dismissing Appellants’ Song-

Beverly Act claims, Cal. Civ. Code §§ 1790 et seq, because the cars were

merchantable and did not qualify for relief under the statute. We agree.

      We review de novo the granting of summary judgment. Peters v. Burlington

Northern R. Co., 931 F.2d 534, 537 (9th Cir. 1990). Under the Song-Beverly Act,

sales of consumer goods in California “shall be accompanied by the manufacturer’s

      **
             The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
1
 We address the issue of punitive damage calculations in a separate published
opinion filed concurrently with the original memorandum disposition.

                                           4
and the retail seller’s implied warranty that the goods are merchantable.” Cal. Civ.

Code § 1792. Under the Act, “‘[i]mplied warranty of merchantability’ . . . means

that the consumer goods meet each of the following: (1) Pass without objection in

the trade under the contract description. (2) Are fit for the ordinary purposes for

which such goods are used. (3) Are adequately contained, packaged, and labeled. (4)

Conform to the promises or affirmations of fact made on the container or label.”

Cal. Civ. Code § 1791.1(a). “[T]he plain language of section 1791.1 provides that

goods which fail to meet any of the four conditions listed therein are in breach of the

implied warranty” under the Act. DeNike v. Mathew Enter., Inc., 76 Cal. App. 5th

371, 384 (2022), review denied (June 15, 2022). The first two conditions “overlap

to some degree” and “fitness for the ordinary purpose” “is shown if the product is in

safe condition and substantially free of defects. Thus, a new car need not be perfect

in every detail; rather, its implied merchantability requires only that a vehicle be

reasonably suited for ordinary use.” Brand v. Hyundai Motor Am., 226 Cal. App.

4th 1538, 1546 (2014), as modified on denial of reh'g (July 16, 2014) (internal

citation and quotation omitted).

      We have previously held that the affected cars “were still functional and safe

to drive.” In re Volkswagen “Clean Diesel” Mktg., Sales Pracs., & Prods. Liab.

Litig., 895 F.3d 597, 608 (9th Cir. 2018). Likewise here, the district court properly

granted summary judgment as to the first two conditions because Appellants did not

                                          5
raise a genuine issue of material fact that the vehicles with the emissions defeat

devices were not fit for providing transportation.

      As to the third and fourth labeling conditions of the Song-Beverly Act, the

district court misstated the law in rejecting those claims on the basis that

“mislabeling alone cannot render a product unmerchantable.” The statute is clear: a

consumer good must meet “each” of the conditions or else it breaches the implied

warranty of merchantability under the Song-Beverly Act. § 1791.1(a); see DeNike,

76 Cal. App. 5th at 384. Appellants argue that Volkswagen mislabeled the vehicles

with stickers on the engine saying that the vehicles complied with EPA and

California Air Resources Board standards and by marketing the vehicles as “green.”

See § 1791.1(a)(4).

      Information on “[a]n owner’s manual or a ‘specs’ sticker may be relevant to

express warranty claims, but neither has anything to do with ‘promises or

affirmations of fact made on the container or label,’ . . . for purposes of establishing

a breach of implied warranty,” especially when the consumer never sees the text of

the manual or sticker. Simgel Co. v. Jaguar Land Rover N. Am., LLC, 55 Cal. App.

5th 305, 320 (2020) (citation omitted). Likewise here, marketing promises and an

emissions compliance sticker under the hood of the car are not labels under the

implied warranty provision of the Song-Beverly Act, especially since the Appellants

                                           6
never saw the compliance stickers. See id. Thus, the cars do not qualify for relief

under the Song-Beverly Act. We affirm the district court’s dismissal of this claim.

      2. The district court dismissed Appellants’ CLRA damages claims because it

concluded that Volkswagen’s offer for Appellants to rejoin the class action

settlement was an “appropriate correction.”       See Cal. Civ. Code § 1782(b).

Appellants argue that this was error. We agree.

      The CLRA states, in relevant part, that “no action for damages may be

maintained under Section 1780 if an appropriate correction, repair, replacement, or

other remedy is given, or agreed to be given within a reasonable time, to the

consumer within 30 days after receipt of the notice.” Cal. Civ. Code § 1782(b)

(emphasis added). A settlement offer that contains a broad release of all claims,

beyond the CLRA claims, is not an “appropriate correction.” Valdez v. Seidner-

Miller, Inc., 33 Cal. App. 5th 600, 616 (2019), review denied (June 26, 2019).

      Here, Volkswagen gave a class settlement offer that, inter alia, required

Appellants to waive all claims, not just those arising under the CLRA. We conclude

that Volkswagen’s correction offer was not “appropriate” because it barred the

Appellants’ ability to bring their other claims arising outside of the CLRA.2 We

2
 Appellants argue that the district court’s decision did not comply with the CLRA
for various other reasons. Because we hold that the class settlement offer was not
an appropriate correction under the CLRA, we need not and do not address
Appellants’ other CLRA arguments.

                                         7
reverse the district court’s dismissal of the CLRA claim and remand because

Volkswagen did not offer an appropriate correction.

      3. Appellants contend that the district court abused its discretion by permitting

and excluding certain evidence on damages based on the finding that there was a

market value for the cars after the emissions defeat devices were discovered.

Specifically, Appellants claim that the district court improperly allowed

Volkswagen’s expert to present testimony that assumed the existence of a post-sale

market for the vehicles. Further Appellants claim that the district court erred by

precluding evidence that the vehicles had no fair market value, the vehicles were not

legal when sold, and Appellants would not have purchased the cars but for the fraud.

Appellants contend that this testimony showed that they were entitled to the full

value of their vehicles at their time of purchase. We disagree.

      We review evidentiary rulings for an abuse of discretion. Gen. Elec. Co. v.

Joiner, 522 U.S. 136, 141 (1997). The district court did not abuse its discretion in

barring evidence that it was illegal to sell the vehicles at issue, nor in concluding that

the vehicles with emissions defeat devices still had unmistakable market value.

Indeed, Appellant Riley sold his vehicle for $10,000 in 2016 after the discovery of

the emissions defeat device.

      Further, the trial court did not abuse its discretion by limiting Appellants’

testimony regarding their own, subjective value of the cars. See Mackie v. Rieser,

                                            8
296 F.3d 909, 917 (9th Cir. 2002) (holding that market value is an objective measure,

not subjective).

      4. Appellants assert that the district court erred by excluding jury instructions

on reliance damages under California Civil Instructions No. 1923. Specifically,

Appellants contend that the court improperly modified the jury instructions sua

sponte, “striking the language permitting recovery of amounts reasonably spent in

reliance on the fraud.”

      We review the district court’s formulation of jury instructions for abuse of

discretion and review de novo whether the instructions accurately state the law. See

Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc., 658 F.3d 936, 941 (9th Cir. 2011).

A party is entitled to a jury instruction on a particular theory of damage only if the

trial evidence provides a sufficient factual basis for invoking that theory. See Jones

v. Williams, 297 F.3d 930, 934 (9th Cir. 2002) (“A party is entitled to an instruction

about his or her theory of the case if it is supported by law and has foundation in the

evidence.”). Because Appellants did not provide a sufficient factual predicate to

warrant giving an instruction on the theory of reliance damages, the district court did

not abuse its discretion in modifying the jury instructions.

      Appellants also did not show that a reliance upon Volkswagen’s fraud caused

additional damages beyond the compensatory damages determined by the district

court. The evidence and proceedings showed no differences in the costs incurred

                                          9
from owning a normal car as compared to owning a vehicle with the emissions defeat

device.

      Appellants argue that they would have acted differently if they had known

that the defeat devices were present. But they did not show any quantifiable damages

incurred in reliance on the affected vehicles. Because Appellants did not show that

they incurred reliance damages, we hold that the district court did not err in not

instructing on reliance damages.

      5. Appellants contend that that the district court judge, Judge Breyer, should

have recused himself because his opinions on the issues in this case were formed in

the separate, yet related, class action proceedings held in multidistrict litigation. We

reject Appellants claim, which we determine is entirely without merit.

      We review a district court's denial of recusal for an abuse of discretion.

Yagman v. Republic Ins., 987 F.2d 622, 626 (9th Cir. 1993). A federal judge must

recuse when, among other things, the judge’s “impartiality might reasonably be

questioned” or if the judge has a personal bias “or prejudice concerning a party, or

personal knowledge of disputed evidentiary facts concerning the proceeding.”

28 U.S.C. § 455(a)(b)(1). However, “[p]arties cannot attack a judge's impartiality

on the basis of information and beliefs acquired while acting in his or her judicial

capacity.” United States v. McTiernan, 695 F.3d 882, 891 (9th Cir. 2012).

                                          10
      Here, the knowledge Judge Breyer developed in the related Volkswagen

litigation was gained through proper juristic proceedings. That does not require

recusal. Further, the district judge’s comments on the record show no predisposition

toward one side or another in the case. Finally, to the extent that Appellants argue

recusal was required because of Judge Breyer’s adverse rulings, “judicial rulings

alone almost never constitute valid basis for a bias or partiality recusal motion,”

Liteky v. United States, 510 U.S. 540, 555 (1994), and do not do so here.

      Further, another judge must be assigned to the case if a party “files a timely

and sufficient affidavit that the judge before whom the matter is pending has a

personal bias or prejudice either against him or in favor of any adverse party.” 28

U.S.C. § 144. Here, Judge Breyer did not abuse his discretion in declining to refer

the case because the affidavit was insufficient, and it was not timely filed. We reject

in full the contentions that Judge Breyer should have recused in this case.

AFFIRMED IN PART, REVERSED IN PART, and REMANDED

                                          11