Opinion
Case No. 2:22-cv-09381-WLH-E
2023-06-21
Bryan KULP and Christina Kulp, and Veronica Rodriguez, each individually and on behalf of all others similarly situated, Plaintiffs, v. MUNCHKIN, INC., Defendant.
Simon Carlo Franzini, Grace Bennett, Jonas Jacobson, Dovel and Luner LLP, Santa Monica, CA, Alan M. Feldman, Pro Hac Vice, Edward S. Goldis, Pro Hac Vice, Zachary Arbitman, Pro Hac Vice, Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP, Philadelphia, PA, for Plaintiff Bryan Kulp. Alan M. Feldman, Pro Hac Vice, Edward S. Goldis, Pro Hac Vice, Zachary Arbitman, Pro Hac Vice, Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP, Philadelphia, PA, Grace Bennett, Jonas Jacobson, Simon Carlo Franzini, Dovel and Luner, LLP, Santa Monica, CA, for Plaintiffs Christina Kulp, Veronica Rodriguez. Amtoj Singh Randhawa, Bryan Cave Leighton Paisner, LLP, Irvine, CA, Bettina J. Strauss, Pro Hac Vice, Timothy J. Hasken, Pro Hac Vice, Bryan Cave Leighton Paisner LLP, St. Louis, MO, Linda C. Hsu, Bryan Cave LLP, Santa Monica, CA, for Defendant.
Simon Carlo Franzini, Grace Bennett, Jonas Jacobson, Dovel and Luner LLP, Santa Monica, CA, Alan M. Feldman, Pro Hac Vice, Edward S. Goldis, Pro Hac Vice, Zachary Arbitman, Pro Hac Vice, Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP, Philadelphia, PA, for Plaintiff Bryan Kulp. Alan M. Feldman, Pro Hac Vice, Edward S. Goldis, Pro Hac Vice, Zachary Arbitman, Pro Hac Vice, Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP, Philadelphia, PA, Grace Bennett, Jonas Jacobson, Simon Carlo Franzini, Dovel and Luner, LLP, Santa Monica, CA, for Plaintiffs Christina Kulp, Veronica Rodriguez. Amtoj Singh Randhawa, Bryan Cave Leighton Paisner, LLP, Irvine, CA, Bettina J. Strauss, Pro Hac Vice, Timothy J. Hasken, Pro Hac Vice, Bryan Cave Leighton Paisner LLP, St. Louis, MO, Linda C. Hsu, Bryan Cave LLP, Santa Monica, CA, for Defendant.
ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT MUCHKIN, INC'S MOTION TO DISMISS
WESLEY L. HSU, UNITED STATES DISTRICT JUDGE
I. Background
Defendant Munchkin, Inc. ("Munchkin") makes and distributes products for infants and toddlers. (First Amended Complaint ("FAC"), Docket No. 25 ¶ 1). One of these products is the "Sturdy Potty Seat" (the "Seat"), a seat that may be installed on top of a standard toilet for children to potty train. (Id.). The Seat has a "pee guard," a raised plastic lip at the front of the seat that is intended to prevent urine from splashing outside of the bowl. (Id. ¶¶ 2-3). The Seat also has a handle on each side. (Id. ¶ 28). The product is sold directly through the Munchkin website and through retailers such as Target and Amazon.com. (Id. ¶¶ 18, 37).
Plaintiff Veronica Rodriguez is a California citizen. (Id. ¶ 10). Rodriguez purchased the Seat for her daughter in May 2022, at a Target store in San Bernardino County, California. (Id. ¶¶ 62-63). In choosing to purchase the Seat, Rodriguez relied both on "the representations on the packaging depicting a child with the [Seat]" and on "Defendant's position as a merchant of children's products for assurances that the product would be safe for her two-year-old daughter." (Id. ¶ 64). Rodriguez's daughter was hurt multiple times climbing off the Seat when "she hit and scratched her pelvic area on the high lip of the pee guard." (Id. ¶ 65). Rodriguez stopped using the Seat to potty train her daughter. (Id.).
Plaintiffs Bryan and Christina Kulp are citizens of Pennsylvania. (Id. ¶ 9). In July 2022, the Kulps purchased the Seat for their three-year-old son at a Target store in Exton, Pennsylvania. (Id. ¶¶ 52, 54). In doing so, they relied on the same representations as Mrs. Rodriguez. (Id. ¶ 54). After the Kulps' son used the Seat for the second time, he used the Seat's attached handles to help him dismount. (Id. ¶ 56). As he did so, "his genitals stuck to and were trapped within the pee guard," resulting in "serious and painful tearing at the base of his penis." (Id. ¶ 56). The Kulps brought their son to the emergency room at the urging of his pediatrician. (Id. ¶ 57).
Rodriguez and the Kulps brought a class action against Munchkin, asserting eight counts: (1) breach of the implied warranty of merchantability under the Uniform Commercial Code ("UCC"); (2) breach of the implied warranty of merchantability under California's Song-Beverly Consumer Warranty Act, Cal Civ. Code §§ 1790, et seq.; (3) violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. § 201-3; (4) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200, et seq.; (5) violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750, et seq.; (6) violation of California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500, et seq.; (7) fraudulent omission; and (8) quasi-contract. Plaintiffs seek damages as well as injunctive relief.
Defendants have moved to dismiss all of Plaintiffs' claims. (Motion to Dismiss, Docket No. 27).
II. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss for failure to state a claim upon which relief can be granted. A complaint may be dismissed for failure to state a claim for one of two reasons: (1) lack of a cognizable legal theory; or (2) insufficient facts under a cognizable legal theory. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). The court must construe the complaint in the light most favorable to the plaintiff, accept all allegations of material fact as true, and draw all reasonable inferences from well-pleaded factual allegations. Gompper v. VISX, Inc., 298 F.3d 893, 896 (9th Cir. 2002). The court is not required to accept as true legal conclusions couched as factual allegations. See Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
Additionally, "allegations of a complaint which aver fraud are subject to Rule 9(b)'s heightened pleading standard." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009); see Fed. R. Civ. Proc. 9(b). This requires that a plaintiff plead "the who, what, when, where, and how" of the alleged fraudulent activity. Id. (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)). "When a claim rests on allegations of fraudulent omission, however"—as the fraud-based claims do here—"the Rule 9(b) standard is somewhat relaxed because a plaintiff cannot plead either the specific time of [an] omission or the place, as he is not alleging an act, but a failure to act." Herremans v. BMW of N. Am., LLC, No. CV 14-02363 MMM PJWX, 2014 WL 5017843, at *9 (C.D. Cal. Oct. 3, 2014). In that case, to satisfy the Rule 9(b) standard, the plaintiff "must describe the content of the omission and where the omitted information should or could have been revealed, as well as provide representative samples of advertisements, offers, or other representations that plaintiff relied on to make her purchase and that failed to include the allegedly omitted information." Id. (quoting Marolda v. Symantec Corp., 672 F. Supp. 2d 992, 1002 (N.D. Cal. 2009)).
III. Discussion
The Court DENIES in part and GRANTS in part Defendant's Motion to Dismiss (the "Motion").
A. Plaintiffs Lack Standing to Seek Injunctive Relief
Among other forms of relief, Plaintiffs seek an injunction barring Munchkin from continuing to market and sell the Seat. (Docket No. 25 ¶ 177). "A plaintiff must demonstrate constitutional standing separately for each form of relief requested." Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018). To demonstrate Article III standing for injunctive relief, "a plaintiff must show (1) [he or she] has suffered an 'injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Padilla v. Whitewave Foods Co., No. LA CV18-09327 JAK (JCx), 2019 WL 4640399, at *5 (S.D. Cal. April 23, 2021) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000)). "Where standing is premised entirely on the threat of repeated injury, a plaintiff must show a sufficient likelihood that he will again be wronged in a similar way." Davidson, 889 F.3d at 967 (quotation omitted).
Defendant argues that Plaintiffs have not plausibly pleaded that they will be wronged again in a similar way. (Docket No. 27 at 14-15). First, they state that "Plaintiffs do not plead any threat of future economic injury because they do not plead facts sufficient to establish they are likely to purchase another Sturdy Potty Seat." (Id. at 14). But that is not the case; Plaintiffs made clear in the FAC that they "would still purchase another Sturdy Potty Seat from Defendant if the product was re-designed to make it safe." (Docket No. 25 ¶¶ 61, 67).
Defendant also argues that Plaintiffs do not establish that they will be wronged again in a similar way because they now have "knowledge of the alleged safety risks" inherent to a potty-training seat with a high-lip design. (Docket No. 27 at 15). Plaintiffs respond that Defendant's argument is "directly contrary to Davidson." (Docket No. 28 at 3). In Davidson, the plaintiff discovered that wipes the defendant marketed as "flushable" were not in fact flushable. Davidson, 889 F.3d at 962. Davidson argued that she faced a "threat of imminent or actual harm by not being able to rely on Kimberly-Clark's labels in the future." Id. at 967. The Ninth Circuit found that this threat of future harm was enough to give Davidson standing to seek injunctive relief. Id. In so finding, the Ninth Circuit held that "a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase . . . . Knowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future." Id. at 969.
Since Davidson, courts in this circuit have continued to clarify the situations in which a plaintiff who was "previously deceived" by a defendant's advertising may seek injunctive relief. See, e.g., Stewart v. Kodiak Cakes, LLC, 537 F. Supp. 3d 1103 (S.D. Cal. 2021); Prescott v. Bayer HealthCare LLC, No. 20-CV-00102-NC, 2020 WL 4430958 (N.D. Cal. July 31, 2020); Jackson v. Gen. Mills, Inc., No. 18CV2634-LAB (BGS), 2019 WL 4599845 (S.D. Cal. Sept. 23, 2019). A review of this caselaw shows that the threat of future injury is determined by the plaintiff's ability to perceive subsequent misrepresentations based on past experience.
Stewart is instructive here. 537 F. Supp. 3d 1103. In that case, the court considered whether plaintiffs had standing for injunctive relief against a defendant food manufacturer based on the high amount of "slack fill" in its products, as well as representations that the products contained "no preservatives" and was "free of artificial additives," "healthy," "protein-packed," and "non-GMO." Id. at 1127. The court found that plaintiffs alleged no threat of future harm—and thus no Article III standing for injunctive relief—where the plaintiffs could verify the descriptors against the nutrition facts label on the product packaging. Id. Plaintiffs did have standing, however, to seek injunctive relief on the "non-GMO" marketing statements because they could not check that claim against the ingredient list on the packaging. Id. Therefore, the court found, "[p]laintiffs face an injury of being unable to rely upon Defendant's 'non-GMO' marketing statements in deciding whether to purchase the product in the future." Id. at 1127-28.
The majority of subsequent cases on the issue—including the cases to which Plaintiffs cite in their opposition—have held similarly. Compare Jackson, 2019 WL 4599845 at *6 (another "slack fill" case in which plaintiffs had no standing for injunctive relief) with Prescott, 2020 WL 4430958, at *6 (plaintiffs had standing for injunctive relief because they had "no way of knowing whether" defendants would change the ingredients in its sunscreen to more accurately reflect the "mineral-based" label) and Hernandez v. Radio Sys. Corp., No. EDCV221861 JGB-KKX, 2023 WL 2629020, at *6 (C.D. Cal. Mar. 9, 2023) (plaintiff had standing because he could not determine in the future whether defendant's electric dog collars would be safe for his dog); but see Padilla v. Whitewave Foods Co., No. LACV1809327 JAK-JCX, 2019 WL 4640399, at *3 (C.D. Cal. July 26, 2019) (plaintiffs did have standing for injunctive relief on "slack fill" claim). A plaintiff has standing for injunctive relief in a case such as this one, then, only where she "ha[s] no way to determine whether the representation . . . is in fact true in the future." Stewart, 537 F. Supp. 3d at 1127 (S.D. Cal. 2021).
Here, Plaintiffs will be able to inspect potty-training seats in the future and determine whether there is a raised pee guard. Plaintiffs therefore do not face a "threat of imminent or actual harm" as required in order to confer standing. Davidson, 889 F.3d at 967. Plaintiffs argue that they "are not experts in product design and cannot determine, based on what they now know, whether a subsequent re-design renders the Sturdy Potty Seat safe." (Docket No. 28 at 4). But Plaintiffs state in their FAC that "[p]ee guards in other potty seats are solid closed-off bumps" and that "a closed-lip design still allows the pee guard to serve its intended purpose . . . without the risk that children will scrape or lacerate themselves." (Docket No. 25 ¶¶ 30-31). They additionally state that "other pee guards are made out of softer material" that "[u]nlike hard plastic . . . would not cause children's genitals to get stuck and torn." (Id. ¶ 32). Based on their own allegations, Plaintiffs now know what to look for when making future purchases. Defendant's Motion is therefore GRANTED with regard to Plaintiffs' claims for injunctive relief. B. Rodriguez Adequately Pleads Breach of Implied Warranty of Merchantability Under the UCC and the Song-Beverly Act (Counts I & II)
Rodriguez brings a claim for breach of the implied warranty of merchantability under both the UCC and the Song-Beverly Act. Defendant argues that these claims fail for two reasons. (Docket No. 27 at 8). First, Defendant asserts that Rodriguez's claim under the UCC must fail because Rodriguez is not in privity with Munchkin, which Defendant maintains is required under the laws of California. (Id.). Second, Defendant states that both the UCC claim and the Song-Beverly claim fail because the product functioned as intended. (Id.).
"Under California's choice of law rules, each class member's consumer protection claim should be governed by the consumer protection laws of the jurisdiction in which the transaction took place." Johnson v. Nissan N. Am., Inc., 272 F. Supp. 3d 1168, 1175 (N.D. Cal. 2017) (quotation omitted). Accordingly, Rodriguez's claims are governed by California law, and the Kulps' claims are governed by Pennsylvania law.
Defendant does not contest that privity is not required for a claim under the Song-Beverly Act.
i. The Third-Party Beneficiary Exception to the Privity Rule Applies
Generally, in California, "a plaintiff asserting breach of warranty claims must stand in vertical contractual privity with the defendant." Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008). There are exceptions to this rule when, for example, "the plaintiff relies on written labels or advertisements of a manufacturer" or "the end user is an employee of the purchaser." Id.
Courts in this circuit are split on whether, under California law, there is a "third-party beneficiary" exception to the privity rule that allows end consumers to assert implied warranty claims against manufacturers. See Roberts v. Electrolux Home Prod., Inc., No. CV 12-1644 CAS VBKX, 2013 WL 7753579, at *9-10 (C.D. Cal. Mar. 4, 2013) ("Courts have reached conflicting results with respect to the question whether California's privity requirement bars a consumer from asserting an implied warranty claim against a manufacturer when the claim arises out of a product purchased from a retailer.") Plaintiffs here argue that the exception applies, while Defendant argues both that the Court should not apply as a matter of law the third-party beneficiary exception to privity and that, even if the exception were applied, Rodriguez "alleges no facts suggesting she falls within the ambit of this exception." (Docket Nos. 28 at 4; 29 at 2).
This Court agrees with the line of decisions holding that California law recognizes the "third-party beneficiary" exception to the privity requirement in implied warranty cases. In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Pracs., & Prod. Liab. Litig., 754 F. Supp. 2d 1145, 1184 (C.D. Cal. 2010); see also Goldstein et al. v. General Motors LLC, No. 19CV1778-LL-AHG, 2022WL 484995 at *9-*10 (S.D. Cal. Feb. 16, 2022); Nickerson v. Goodyear Tire and Rubber Corp., No. 8:20-CV-00060-JLS-JDE, 2020 WL 4937561 at *6 (C.D. Cal. 2020); Mosqueda v. Am. Honda Motor Co., Inc., 443 F. Supp. 3d 1115, 1128 (C.D. Cal. 2020); Roberts, 2013 WL 7753579, at *9-10. The Court disagrees with the contrary line of cases, such as Zakikhan et al. v. Hyundai Motor Co., No. 8:20-CV-01584, 2021 WL 4805454 at *9 (C.D. Cal. June 28, 2021). The reasoning in those cases is that Clemens itself implicitly forecloses the application of the third-party beneficiary rule. Id. This Court does not read Clemens to foreclose a state law exception to the privity requirement that it did not expressly consider (presumably because the parties did not assert it). Accord Goldstein, 2022 WL 484995 at *10. Rather, Clemens forecloses the creation of a new federal exception to the privity rule. Plaintiffs in this case do not ask for that; they seek only application of an existing state law exception.
California courts hold that "California law permits third party beneficiaries to enforce the terms of a contract made for their benefit." Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004, 1021, 90 Cal. Rptr. 3d 453, 468 (2009) (quotation omitted); see also Levy v. Only Cremations for Pets, Inc., 57 Cal. App. 5th 203, 213, 271 Cal.Rptr.3d 250 (2020) (in a breach of contract action, dismissing the complaint with leave to amend so plaintiffs could better plead their third-party beneficiary status); Gilbert Fin. Corp. v. Steelform Contracting Co., 82 Cal. App. 3d 65, 69, 145 Cal.Rptr. 448 (Ct. App. 1978) (party was "a third-party beneficiary of the contract" at issue "and therefore [could] sue for breach of the implied warranty of fitness"). This Court is compelled to follow California's rule.
Further, Plaintiffs plausibly allege that they are third-party beneficiaries of the contract between Munchkin and the retailer from which they purchased the Seat. Plaintiffs allege that they "were the intended third-party beneficiaries of agreements between Defendant and retailers" and that "Defendant knew that consumers, including Plaintiffs and the class, were the ultimate consumers of the product." (Docket No. 25 ¶ 85). Construing the complaint in the light most favorable to Plaintiffs, the Court finds that Plaintiffs plausibly alleged that the third-party beneficiary exception to privity applies to Rodriguez's UCC claim.
ii. Rodriguez Plausibly Alleges that the Seat Did Not Function as Intended
Under California's Commercial Code, the implied warranty of merchantability guarantees that goods "[a]re fit for the ordinary purposes for which such goods are used." Cal. Com. Code § 2314. Under the Song-Beverly Act, the implied warranty of merchantability means that goods "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; [and] 4) Conform to the promises or affirmations of fact made on the container or label." Cal. Civ. Code § 1791.1(a). Plaintiffs assert that the Seat is not fit for its ordinary purpose because it has "a substantial defect that can cause substantial injury to small children's groins" during regular use. (Docket No. 25 ¶ 97).
Defendant makes two unavailing arguments in response. First, Defendant points out that "Rodriguez does not allege that the Sturdy Potty Seat did not serve its intended function—i.e., reduce the size of the standard toilet to enable toddlers to sit on the toilet." (Docket No. 27 at 9). But Rodriguez alleges a safety defect. "California courts have rejected the argument that unsafe products retaining some functionality satisfy the implied warranties." Roberts, 2013 WL 7753579, at *5; see also Avedisian v. Mercedes-Benz USA, LLC, No. CV 12-00936 DMG CWX, 2013 WL 2285237, at *5 (C.D. Cal. May 22, 2013) (plaintiff adequately pleaded breach of implied warranty where defective car interior caused cuts on plaintiff's arms and hands).
Second, Defendant states that Rodriguez "primarily alleges facts about children's actions while using the Sturdy Potty Seat that could result in injury, rather than facts about any purported 'unsafe' nature of the product itself." (Docket No. 29 at 2). But Rodriguez alleged that her daughter was hurt when she "attempted to climb off the seat to reach the ground." (Docket No. 25 ¶ 65). Again, construing the complaint in the light most favorable to Plaintiffs, "climbing" off the Seat is the same as getting off of the Seat, which falls within the ordinary use of the Seat.
Rodriguez therefore adequately pleads her claims under the UCC (Count I) and the Song-Beverly Act (Count II), and Defendant's Motion is DENIED as to those claims.
C. The Kulps Adequately Plead Breach of Implied Warranty of Merchantability Under the UCC (Count II)
Under the Pennsylvania Commercial Code, the implied warranty of merchantability likewise guarantees that goods "are fit for the ordinary purposes for which [they] are used." 13 Pa. Stat. and Cons. Stat. Ann. § 2314. Defendant makes the same arguments here as with Rodriguez. But, like California, Pennsylvania rejects the notion that a good is fit for its ordinary purpose if it is unsafe to use. See, e.g., Morello v. Kenco Toyota Lift, 142 F. Supp. 3d 378, 388 (E.D. Pa. 2015) (summary judgment precluded on implied warranty of merchantability claim; question of fact remained as to whether forklift suffered a safety defect). The Kulps adequately plead their claim under the UCC, and Defendant's Motion is DENIED as to that claim. D. Rodriguez Adequately Pleads Common Law Fraudulent Omission and Statutory Claims Under the CLR and UCL (Counts IV-V, VII) But Not Under the FAL (Count VI)
Rodriguez asserts a common law claim for fraudulent omission, as well as statutory fraud claims under the CLR, the UCL, and the FAL. Rodriguez adequately pleads her fraudulent omission claim and her claims under the CLR and UCL. Rodriguez's claim under the FAL, however, is not cognizable.
i. Rodriguez's Fraudulent Omission Claim
"A fraudulent or deceptive omission is actionable if it is contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose." People v. Johnson & Johnson, 77 Cal. App. 5th 295, 325, 292 Cal.Rptr.3d 424 (2022) (quotation omitted). "Under California law, there are four circumstances in which an obligation to disclose may arise: 1) when the defendant is in a fiduciary relationship with the plaintiff; 2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; 3) when the defendant actively conceals a material fact from the plaintiff; and 4) when the defendant makes partial representations but also suppresses some material facts." Smith v. Ford Motor Co., 749 F. Supp. 2d 980, 987 (N.D. Cal. 2010) (quoting LiMandri v. Judkins, 52 Cal. App. 4th 326, 337, 60 Cal.Rptr.2d 539 (1997)).
In the opposition to this Motion, Rodriguez argues only that she has plausibly alleged the second and fourth LiMandri factors; that is, Rodriguez argues that Munchkin had a duty to disclose the defect because Munchkin had exclusive knowledge of the defect and because Munchkin made partial representations. (Docket No. 28 at 11-15).
Rodriguez does not adequately plead the "partial representation" factor under LiMandri. To allege a partial representation, a plaintiff must plead that it relied on an affirmative representation. Anderson v. Apple Inc., 500 F. Supp. 3d 993, 1019 (N.D. Cal. 2020). "This is because what is misleading about a partial representation is that the affirmative representation is not accompanied by the omitted information." Id. Here, Plaintiffs assert that a warning label on the Sturdy Potty Seat does not warn of the alleged safety defect. (Docket No. 25 ¶¶ 43-44). But Rodriguez does not allege in the FAC that she relied on the warning label in any way. See Anderson, 500 F. Supp. 3d at 1019 ("plaintiffs allege there are two partial representations . . . [n]one of the plaintiffs, however, alleges that he or she viewed either"). The only advertising that Rodriguez claims reliance on is "representations on the packaging depicting a child safely using the Sturdy Potty Seat." (Id. ¶ 64). But the images of the child on the packaging, which show the child placing the Seat on top of a toilet, do not constitute an "affirmative representation." Anderson, 500 F. Supp. 3d at 1019; see also Ebner v. Fresh, Inc., 838 F.3d 958, 966 (9th Cir. 2016) (concluding that, "in the absence of any statement or other depiction anywhere on the package about lip product accessibility" there was no partial omission regarding the inaccessibility of the product).
Rodriguez does, however, plausibly allege that Defendant had "exclusive knowledge" of the defect. The FAC alleges that "Defendant had exclusive knowledge of the defect" because "Defendant, as the manufacturer and distributer of children's products conducts safety testing that would reveal the Sturdy Potty Seats' dangerous defect." (Docket No. 25 ¶ 128). Moreover, the FAC contains images of product reviews that mention the safety defect. (Id. ¶ 37). These reviews were posted on Amazon.com and Target's website years before Plaintiffs purchased the Seat. (Id.). The FAC further alleges that "Defendant monitors and keeps track of consumer reviews and complaints" on these websites and that "Defendant even responds to consumer questions and concerns on Amazon and Target, showing that they monitor and see customer complaints." (Id. ¶ 38).
Defendants aver that this is not enough to constitute "exclusive knowledge" on Munchkin's part because Rodriguez could also have read these reviews before making her purchase. (Docket No. 29 at 4-5). But in general, "courts have not defined 'exclusive' literally, but have found such claims cognizable if the defendant has 'superior' knowledge of a defect that was not readily apparent and there is no or only . . . limited publicly available information about the defect." Daniel v. Ford Motor Co., No. 2:11-02890 WBS EFB, 2016 WL 2899026, at *4 (E.D. Cal. May 18, 2016); see also Oddo v. United Techs. Corp., No. 815CV01985CASEX, 2022 WL 577663, at *14 (C.D. Cal. Jan. 3, 2022) (quoting Daniel). Here, Rodriguez adequately alleges that Defendant had "superior" knowledge of the defect through its testing and monitoring activities. This is enough to fulfill the second LiMandri prong.
Further, Rodriguez meets the Rule 9(b) pleading standard for a fraudulent omission claim. As discussed, meeting the standard requires that a plaintiff "describe the content of the omission and where the omitted information should or could have been revealed, as well as provide representative samples of advertisements, offers, or other representations that plaintiff relied on to make her purchase and that failed to include the allegedly omitted information." Marolda v. Symantec Corp., 672 F. Supp. 2d 992, 1002 (N.D. Cal. 2009). The FAC provides images of the packaging that Plaintiffs rely on and states, in addition to the above, that "Defendant should have, but did not, warn consumers of the pee guard's propensity to injury young children. This warning could have been included on the packaging for the product." (Docket No. 25 ¶¶ 2, 126).
Rodriguez therefore adequately pleads her common law fraudulent omission claim, and Defendant's Motion is DENIED as to that claim.
ii. Rodriguez's FAL Claim
"A FAL claim is not cognizable when based solely on an omission of material information." Stewart v. Electrolux Home Prod., Inc., 304 F. Supp. 3d 894, 907-08 (E.D. Cal. 2018) (citing Norcia v. Samsung Telecomms. Am., LLC, No. 14-cv-00582-JD, 2015 WL 4967247, at * 8 (N.D. Cal. Aug. 20, 2015) ("There can be no FAL claim where there is no 'statement' at all.")). Instead, "the complaint must still identify an affirmative statement that was made false or misleading by the omission of relevant and material information." Id. As discussed regarding Rodriguez's "partial representation" claim, supra, Rodriguez does not allege that she relied on any affirmative statement. Defendant's Motion is therefore GRANTED as to the FAL claim.
iii. Rodriguez's CLRA and UCL Claims
The CLRA prohibits "unfair methods of competition and unfair or deceptive acts or practices," while the UCL prohibits "any unlawful, unfair or fraudulent business act or practice." Cal. Civ. Code § 1770(a); Cal. Bus. & Prof. Code § 17200.
"Fraudulent omissions are actionable under both" the CLRA and the UCL. Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 2015) (citing Klein v. Chevron U.S.A., Inc., 202 Cal. App. 4th 1342, 137 Cal.Rptr.3d 293 (2012)). Moreover, "[a] plaintiff can prevail on a CLRA or UCL claim based on a material omission if the defendant had exclusive knowledge of the defect." Daniel v. Ford Motor Co., No. 2:11-02890 WBS EFB, 2016 WL 2899026, at *4 (E.D. Cal. May 18, 2016). As stated above, Plaintiffs adequately plead a fraudulent omission claim based on Munchkin's exclusive knowledge of the defect. Defendant's Motion with regard to Rodriguez's CLRA and UCL claims is therefore DENIED. E. The Kulps Adequately Plead Common Law Fraudulent Omission and Violation of the Pennsylvania UTPCPL (Counts III & VII)
At the motion hearing, counsel for Defendant asked the Court to clarify that 1) the "unfair" prong of the UCL does not apply and 2) Plaintiffs have not plausibly alleged an affirmative misrepresentation. While the request would have been more appropriate on a Rule 12(f) motion to strike, the Court agreed to consider narrowing the issues based in part on Defendant's reference to Kennedy Funding, Inc. v. Chapman, No. C 09-01957 RS, 2010 WL 2528729, at *11 (N.D. Cal. June 18, 2010) ("[D]ismissal of separate claims . . . at the pleading stage will serve the felicitous purpose of narrowing the action, by eliminating superfluous or unnecessary claims and concentrating the parties' (and the Court's) energies on the essence of the underlying dispute.") Kennedy concerned superfluous "claims" that were in fact requests for relief. Here we are dealing with different theories of liability. Additionally, the Court has not found that the "unfair" prong of the UCL does not apply, and it declines to narrow that issue at this stage. As to Defendant's second request, this Order has made clear that Plaintiffs do not plead an affirmative misrepresentation in the FAC.
Pennsylvania's UTPCPL prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." 73 Pa. Stat. Ann. § 201-3. Defendant takes issue with Plaintiffs' allegations under the "catchall provision" of the UTPCPL, which prohibits "[e]ngaging in any . . . fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding." 73 Pa. Stat. Ann. § 201-2; Zwiercan v. Gen. Motors Corp., 58 Pa. D. & C.4th 251 (Com. Pl. 2002). Additionally, Defendant states that the Kulps have not plausibly alleged a fraudulent omission under Pennsylvania common law. (Docket No. 27 at 19).
Under both Pennsylvania common law and the UTPCPL, "[a]n omission is actionable as a fraudulent misrepresentation where there is a duty to disclose." Elbeco Inc. v. Nat'l Ret. Fund, 128 F. Supp. 3d 849, 859-60 (E.D. Pa. 2015). Pennsylvania courts have found that "a duty to speak exists, in the context of a business transaction with an ordinary non-business consumer, when the seller has superior knowledge of a material fact"—such as the existence of a "latent defect"—"that is unavailable to the consumer." Zwiercan, 58 Pa. D. & C.4th 251.
That is the case here. As discussed above, under California law, the FAC plausibly alleges that Munchkin had "exclusive knowledge" of the defect that gave rise to a duty to disclose. See supra. Based on these same allegations, the Court finds that Plaintiffs adequately plead that Munchkin had superior knowledge of the safety defect under Pennsylvania law such that the Kulps' fraudulent omission-based claims must survive a motion to dismiss. Defendant's motion is accordingly DENIED as to these claims.
F. Plaintiffs Adequately Plead Their Quasi-Contract Claims (Count VIII)
i. Rodriguez's Quasi-Contract Claim
Defendant states that the Court must dismiss Rodriguez's quasi-contract claim "because it is no more than a claim for unjust enrichment, which California courts do not recognize as an independent cause of action." (Docket No. 27 at 22). While this may be technically true, "[w]hen a plaintiff alleges unjust enrichment, a court may construe the cause of action as a quasi-contract claim seeking restitution." Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (quoting Rutherford Holdings, LLC v. Plaza Del Rey, 223 Cal. App. 4th 221, 231, 166 Cal. Rptr.3d 864 (2014)). Defendant also argues that Rodriguez's quasi-contract claim fails because she has not adequately pleaded her statutory fraud claims. (Docket No. 29 at 10). Because the Court has found that Rodriguez has adequately pleaded her CLRA and UCL claims, Defendant's Motion is DENIED as to Rodriguez's claim for quasi-contract.
ii. The Kulps' Quasi-Contract Claim
An unjust enrichment claim brought under Pennsylvania law may be "based on unlawful or improper conduct . . . established by an underlying claim, such as fraud, in which case the unjust enrichment claim is a companion to the underlying claim." Whitaker v. Herr Foods, Inc., 198 F. Supp. 3d 476, 492 (E.D. Pa. 2016). To adequately allege unjust enrichment, a plaintiff must allege that "(1) he conferred a benefit on the defendant, (2) the defendant knew of the benefit and accepted or retained it, and (3) it would be inequitable to allow the defendant to keep the benefit without paying for it." Id. (citing Mitchell v. Moore, 729 A.2d 1200, 1203-04 (Pa. Super. Ct. 1999)).
Munchkin claims that the Kulps do not adequately allege unjust enrichment because they do not plead that they "conferred a benefit on" Munchkin. (Docket No. 27 at 23). First, Munchkin states that Pennsylvania law requires Plaintiffs to allege that Munchkin "specifically requested benefits" or "misled" the Kulps into conferring a benefit. (Id. at 23-24). But the case that Defendant cites for this proposition, Goldsmith Associates, Inc. v. Del Frisco's Restaurant Group, LLC, concerns unpaid services. No. CIV.A. 09-1359, 2009 WL 3172752, at *1 (E.D. Pa. Oct. 1, 2009). Here, in contrast, it is clear from the FAC that the Kulps bought and paid for the Seat from a third-party retailer that Munchkin authorized to sell its goods. (Docket No. 25 ¶¶ 52, 62, 85). The pleading requirement Defendant refers to does not apply in this context.
Second, Defendant claims that the Kulps "have not sufficiently alleged their relationship with Munchkin is close enough to confer a benefit specific to Munchkin." (Docket No. 27 at 24). While Plaintiffs and Defendant agree that the relationship between the parties to a quasi-contract claim cannot be "too remote," they disagree on the degree of remoteness allowed. (Id.; Docket No. 28 at 24-25). Defendant appears to suggest that a plaintiff must buy directly from the manufacturer to confer a benefit. (Docket No. 27 at 24). Plaintiffs, on the other hand, cite Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC to establish that "direct conferral of a benefit is not required." 737 F. Supp. 2d 380, 444 (E.D. Pa. 2010) (emphasis in original). In that case, the court found that plaintiffs' purchase of a drug "was a benefit conferred on [the defendant manufacturer] even though plaintiffs did not purchase the drug directly from [the defendant]." Id. This convinces the Court that, at this stage, the Kulps adequately allege they conferred a benefit on Munchkin by purchasing the Seat from a third-party retailer.
Finally, Defendant argues that the Kulps are required to "specifically allege the reasonable value" of the benefit conferred on Munchkin, which they have not done. (Docket No. 27 at 25). But the case that Defendant cites for this proposition again concerns unpaid services. (Id.); Int'l Strategic Cancer All., LLC v. Stichting Katholieke Universiteit, No. CV 17-2024, 2017 WL 4681789, at *5 (E.D. Pa. Oct. 18, 2017). This Court has not located any Pennsylvania cases regarding the purchase of defective goods in which a plaintiff was required to specifically allege the value of the benefit conferred on the defendant.
Finding, therefore, that the Kulps adequately plead their unjust enrichment claim, the Court DENIES Defendant's Motion as to that claim.
IV. Conclusion
Based on the foregoing discussion, Munchkin's Motion to Dismiss is GRANTED in part and DENIED in part. Because Plaintiffs submitted to the tentative ruling, there is no leave to amend.
IT IS SO ORDERED.