Bales v. FCA US LLC

Background

James C. Bales alleged that his 2013 RAM 1500 pickup truck had a defective electrical architecture involving the PowerNet system and Body Control Module. He alleged that the truck repeatedly developed warning-light and operating problems between 2014 and 2018, and that FCA knew about similar electrical defects in its vehicles but did not disclose the alleged PowerNet defect before or during his ownership.

Bales asserted four claims: breach of express warranty under the Song-Beverly Act, breach of implied warranty under that Act, violation of Section 1793.2 of the Song-Beverly Act, and fraudulent inducement based on concealment. FCA moved to dismiss the fraud claim under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. FCA also moved under Rule 12(f) to strike allegations it considered immaterial or improper.

Motion to dismiss

The court denied FCA’s motion to dismiss. It held that Bales adequately alleged the elements of fraudulent concealment: that FCA concealed a material fact, had a duty to disclose it, intentionally concealed it, that Bales was unaware of it and would not have acted the same way had he known, and that the concealment caused harm.

The court also rejected FCA’s argument that the economic-loss rule barred the fraud claim because it overlapped with Bales’s warranty claims. The court explained that, under the authorities it cited, fraud claims may accompany contract claims. The motion to dismiss was therefore DENIED.

Motion to strike

The court denied FCA’s request to strike allegations about electrical architectures and modules in Bales’s truck and other vehicles. It found those allegations relevant because they concerned systems present in Bales’s truck or a predecessor module with similar alleged symptoms. The court also denied FCA’s request to strike paragraphs supporting Bales’s fraudulent-concealment claim.

The court granted FCA’s request to strike paragraphs concerning the “bankruptcy” or “bailout” of FCA’s predecessors. Although the court recognized that those matters were publicly known, it found them immaterial to the alleged facts and impertinent. The motion to strike was therefore DENIED IN PART and GRANTED IN PART.

Disposition and reassignment

The court’s order denied the motion to dismiss and denied in part and granted in part the motion to strike. Because both parties consented during oral argument to magistrate-judge jurisdiction for all purposes, the court reassigned the case to a magistrate judge to be selected randomly. Judge William Alsup signed the order.