Gunn v. FCA US, LLC

Background

James Gunn and Dustin Stafford sued FCA US, LLC on behalf of themselves and a proposed California class of purchasers of new vehicles distributed by FCA. The complaint concerned Chrysler, Jeep, Dodge, Ram, Fiat, and Maserati vehicles from model year 2018 onward. Plaintiffs alleged that FCA inflated the destination charges for transporting vehicles to dealerships and passed those inflated charges on to consumers. They asserted claims under California’s Unfair Competition Law, the Consumers Legal Remedies Act, unjust enrichment, and a common-law claim for money had and received.

FCA moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. FCA argued that the destination charges were fully disclosed to consumers before purchase. The opinion describes Stafford’s purchase of a 2022 Ram 2500 Laramie truck: the vehicle’s required window sticker listed a $56,990 base price, $13,435 in optional equipment, a $1,795 destination charge, and a $72,220 total price.

UCL claims

Plaintiffs pursued the unfair and fraudulent parts of California’s Unfair Competition Law. For the unfairness claim, they clarified that they challenged the markup itself, not a misrepresentation, nondisclosure, or other deception. The court concluded that, because the charge was disclosed, the alleged markup did not plausibly interfere with consumers’ ability to compare prices. The court also found that plaintiffs had not adequately alleged that the markup violated public policy embodied in the federal Automobile Information Disclosure Act. The court said that statute requires disclosure of the amount charged to the dealer for transportation but does not restrict a manufacturer’s freedom to set prices.

The court also rejected the unfairness theory based on balancing the harm to consumers against the usefulness of FCA’s conduct. Because plaintiffs disclaimed reliance on deception, their theory was that they paid more because FCA marked up the destination charge. The court said this theory would require it to determine what profit was fair or reasonable for different parts of a vehicle sale, and that the Unfair Competition Law did not give courts a general license to review the fairness of private transactions.

For the fraudulent-practices claim, the court applied the reasonable-consumer test, which asks whether members of the public are likely to be misled. The court found persuasive an earlier decision involving materially similar destination-charge allegations and concluded that a reasonable consumer would not be misled by FCA’s fully disclosed charge. In the court’s view, the term “destination charge” did not reasonably imply that the amount excluded profit, and the complaint did not adequately allege an affirmative misrepresentation or a material omission.

Other claims and disposition

The court concluded that plaintiffs had not plausibly alleged that FCA’s conduct was unfair, fraudulent, or deceptive, or that FCA was unlawfully or unjustly retaining money belonging to them. Because the remaining claims arose from the same conduct as the UCL claim, the court dismissed the Consumers Legal Remedies Act, unjust-enrichment, and money-had-and-received claims as well.

The court dismissed the complaint in its entirety and granted plaintiffs an opportunity to amend. Plaintiffs could file an amended complaint consistent with the order by September 5, 2023. The court prohibited adding new claims or defendants without express prior approval and stated that further opportunities to amend were not likely. It also stated that failing to meet the amendment deadline would result in dismissal with prejudice under Federal Rule of Civil Procedure 41(b).