Garcia v. Harley-Davidson Motor Company, Inc.

Background

Ronald Garcia alleged that certain Harley-Davidson motorcycles included an antilock braking system (ABS) wiring harness that could fail during normal operation. According to the first amended complaint, turning the front wheel back and forth could break a necessary wire before the expected useful life of the motorcycle. Garcia alleged that the ABS could then stop working without the warning light revealing the problem, creating a safety risk because Harley-Davidson gave different braking instructions for motorcycles with and without ABS.

Garcia alleged that Harley-Davidson knew of the wiring issue in 2008, worked to change the design, continued using the same wiring harness in several 2008, 2009, and 2010 models, and did not inform affected owners. He said he purchased a new 2008 Street Glide motorcycle with ABS from a dealer in Oakland, California, paid more for the ABS feature, and learned about the alleged defect in March 2019. The complaint did not indicate that a mechanic had inspected the motorcycle or that Garcia had sought repairs.

Garcia asserted California Unfair Competition Law claims based on unlawful, unfair, and fraudulent business practices; breach of express warranty; breach of implied warranty under the California Commercial Code; breach of implied warranty under the Song-Beverly Act; a federal Magnuson-Moss Warranty Act claim; unjust enrichment; and declaratory judgment. He sought to represent a California purchaser class for several claims and a nationwide class for the remaining claims. Harley-Davidson moved to dismiss under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim.

Rulings on the Claims

California Unfair Competition Law. The court held that Garcia adequately alleged injury because he described a specific safety-related defect, alleged that the ABS could become disabled without an obvious sign, and alleged that he would not have paid the same price had he known about the defect. The court also found that he plausibly alleged a safety hazard and therefore a possible duty to disclose the defect. It denied dismissal based on the alleged lack of injury, the speculative nature of the safety risk, the claimed lack of a duty to disclose, and the primary-jurisdiction doctrine. That doctrine can defer a court’s consideration of technical issues to a regulatory agency; the court declined to apply it because the National Highway Traffic Safety Administration had not investigated this alleged defect, the claims did not arise under the federal vehicle-safety statute, and the issue was within the court’s competence.

The court dismissed the UCL claim to the extent it was based on affirmative misrepresentations. Garcia alleged reliance on Harley-Davidson’s promotional materials but did not identify which specific representations he saw and relied on before purchasing the motorcycle. The dismissal was with leave to amend, and the court permitted Garcia to file a second amended complaint by December 6, 2019. The court denied dismissal of the UCL claim to the extent it was based on unlawful conduct because that theory rose or fell with the warranty claims, and the Song-Beverly implied-warranty claim survived.

Express warranty. Harley-Davidson argued that the express warranty covered repair or replacement only for defects discovered within two years after purchase. At the hearing, Garcia’s counsel agreed to dismiss this claim without prejudice while preserving the possibility of seeking leave to amend if later evidence supported it. Based on that stipulation, the court granted the motion as to the express-warranty claim and dismissed it without prejudice. The court’s conclusion also stated that the claim was dismissed with leave to amend, and said Garcia could later seek leave to amend if he became aware of supporting evidence.

California Commercial Code implied warranty. Garcia purchased the motorcycle from an independent dealer rather than directly from Harley-Davidson. The court held that California law generally requires contractual privity—an appropriate direct relationship in the chain of sale—for an implied-warranty claim under Commercial Code section 2314. It rejected Garcia’s argument that he could proceed as an intended third-party beneficiary of Harley-Davidson’s warranty to the dealer. The court granted dismissal of this claim and dismissed it with prejudice. It did not reach Harley-Davidson’s other arguments concerning this claim, including statute of limitations, injury, and conflict with the express warranty.

Song-Beverly Act implied warranty. The court denied dismissal of this claim. It rejected Harley-Davidson’s statute-of-limitations argument because Garcia plausibly alleged that the company’s duty to disclose the safety defect could support tolling based on fraudulent concealment. The court also held that Garcia did not need to allege an already-manifested failure if he plausibly alleged that the ABS wiring was substantially certain to fail during the motorcycle’s useful life. Whether the wiring actually had that failure likelihood was an issue of fact for a later stage.

Magnuson-Moss Warranty Act. The parties agreed that this federal warranty claim stood or fell with the state-law warranty claims. Because the Song-Beverly implied-warranty claim survived, the court denied dismissal of the Magnuson-Moss claim.

Unjust enrichment and declaratory judgment. The court denied dismissal of the unjust-enrichment claim, although it noted that dismissal might be appropriate later if a full factual record showed that an express contract governed the parties’ relationship. The court also declined to dismiss the declaratory-judgment claim as duplicative of the damages and injunctive-relief claims.

Class-related issues. Harley-Davidson argued that Garcia lacked standing to represent a nationwide class and that the court lacked personal jurisdiction over claims brought by class members outside California. The court reserved those issues for the class-certification stage because Garcia’s individual standing and Harley-Davidson’s jurisdictional connection to his individual claims were not disputed.

Disposition

The court granted in part and denied in part Harley-Davidson’s motion to dismiss. It granted dismissal of the UCL claim based on affirmative misrepresentations and the express-warranty claim, both with leave to amend as stated in the order. It granted dismissal of the UCC implied-warranty claim, which it dismissed with prejudice. The motion was otherwise denied. Judge Joseph C. Spero allowed Garcia to file a second amended complaint by December 6, 2019, and stated that Garcia could later seek leave to amend the express-warranty claim if supporting evidence became available.