Shu v. Toyota Motor Sales USA, Inc.

Background

This putative class action concerned alleged misrepresentations about adaptive headlights in 2022 Toyota RAV4 Prime XSE vehicles. The four named plaintiffs alleged that Toyota’s websites, brochures, vehicle-window labels, and other written materials represented that the vehicles included adaptive headlights. They alleged that they relied on those representations, paid more for the vehicles or packages, and later discovered that the vehicles did not have the feature.

The plaintiffs asserted nine claims: fraud, California Consumer Legal Remedies Act claims, California false-advertising claims, negligent misrepresentation, California Unfair Competition Law claims, New York deceptive-practices and false-advertising claims, express-warranty claims under California and New York law, California Song-Beverly Consumer Warranty Act claims, and federal Magnuson-Moss Warranty Act claims. They sought to represent a nationwide class, a California subclass, and a New York subclass.

Legal standard

The defendants moved to dismiss under the federal pleading rules. A complaint must provide enough facts to make a claim plausible, rather than merely reciting legal conclusions. Fraud claims also must be pleaded with particularity, meaning the complaint generally must identify the who, what, when, where, and how of the alleged misconduct.

Rulings on the claims

The court dismissed claims one through six, which included the fraud-based claims, for failure to plead fraud with the required particularity. The court held that the allegations were sufficient to identify Toyota Motor Sales USA, Inc. as responsible for advertising and selling the vehicles, but the complaint did not explain Toyota Motor North America, Inc.’s function. The court also found that the plaintiffs generally alleged reliance on misleading statements, but needed to identify more specifically which marketing materials or website information they saw and when they saw it. Sharlene Shu also needed to specify what she read on the vehicle-window label and when she read it. The dismissal of these claims was with leave to amend.

The court granted the motion to dismiss the California Consumer Legal Remedies Act claim. It held that Sharlene Shu did not provide the written notice required before seeking damages. It also held that she did not adequately plead Toyota’s pre-sale knowledge that the representations were incorrect or Toyota’s specific intent to defraud. The court dismissed the Consumer Legal Remedies Act damages claim without prejudice.

The court dismissed the New York negligent-misrepresentation claim because the plaintiffs did not allege the special or similar relationship that New York law requires before a defendant has a duty to provide correct information. The court stated that a contract to purchase a product does not itself create that relationship. This dismissal was without prejudice, although the court said it appeared unlikely that amendment would cure the defect.

The court dismissed the express-warranty claims, including the California Song-Beverly claims and the plaintiffs’ individual Magnuson-Moss claims, because the plaintiffs needed to identify the specific statements or promises that formed the alleged warranties. The court left open an additional issue concerning whether Mark Tengowski gave sufficient notice of an alleged breach under New York law, because the parties had not fully briefed whether notice to the dealership was enough. The warranty claims were dismissed with leave to amend.

The court dismissed the California Unfair Competition Law claims because they depended on claims the court had dismissed. It also stated that the New York plaintiffs could not pursue California Unfair Competition Law claims for conduct occurring outside California, and that the plaintiffs had conceded that the California false-advertising claim was limited to California residents. The conclusion stated that certain claims, including Unfair Competition Law and false-advertising claims brought by non-California residents, could not be reasserted.

Disposition

Judge Laurel Beeler dismissed the complaint with leave to amend. The plaintiffs could file an amended complaint within 28 days and were required to attach a blackline comparison with the current complaint. The order disposed of the defendants’ motion to dismiss identified as ECF No. 24.