Raynaldo v. American Honda Motor Co., Inc.

Background

The plaintiffs filed a second amended class action complaint against American Honda Motor Co., Inc. They alleged that 2017–2019 Honda CR-Vs and 2016–2019 Honda Accords shared a defect causing parasitic draining—the continued use of battery power when the vehicle was turned off. According to the complaint, the defect affected the Fast Controller Area Network, or F-CAN, a vehicle electrical subnetwork. The alleged problem prevented the F-CAN from fully entering sleep mode, causing excessive electrical draw, battery depletion, and vehicle malfunctions, including unexpected shutdowns, stalling, and failure to start.

The plaintiffs asserted 23 claims under the laws of Massachusetts, Michigan, Nevada, Arizona, New York, Florida, Iowa, and California, along with common-law claims. The claims generally involved statutory fraud, fraudulent omission or concealment, breach of express and implied warranties, unjust enrichment, and requests for damages, injunctive relief, declaratory relief, and attorneys’ fees and costs.

Honda moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legally recognized claim. The court previously found that the plaintiffs had not identified the electrical components allegedly causing the battery drain. In the second amended complaint, the plaintiffs identified the F-CAN and related software and described how the alleged defect caused the vehicle problems.

Court’s Analysis

Alleged defect. The court held that the plaintiffs adequately pleaded a defect. They identified the F-CAN as the allegedly defective electrical system and plausibly connected that system, along with related software, to the battery drain and the reported vehicle failures.

Statutory fraud. The court denied Honda’s motion to dismiss the statutory fraud claims. Fraud claims must satisfy Federal Rule of Civil Procedure 9(b), which requires the circumstances of the alleged fraud to be stated with particularity. The court found that the plaintiffs had remedied the earlier pleading deficiency by identifying what Honda allegedly should have disclosed and why the system was defective. The court also found that allegations involving more than 100 consumer complaints submitted to the National Highway Traffic Safety Administration, along with Honda’s investigation into parasitic draining, plausibly supported Honda’s alleged pre-sale knowledge of the defect.

Fraudulent omission and concealment. The court granted Honda’s motion without leave to amend as to the fraudulent omission and concealment claims. The plaintiffs alleged that Honda knowingly replaced defective parts with other defective parts. The court found that theory implausible because the alleged defect involved the F-CAN, not the battery, and generic allegations about battery replacements did not plausibly show affirmative acts to hide the defect or prevent consumers from discovering it. The court stated that the second amended complaint had not corrected the deficiencies identified in the prior dismissal order.

Express warranty. The court denied Honda’s motion to dismiss the breach-of-express-warranty claim. Plaintiff George Jones alleged that he experienced vehicle problems within months of purchase, while the vehicle was covered by Honda’s New Vehicle Limited Warranty. The warranty covered repair or replacement of parts defective in material or workmanship under normal use. The court held that the plaintiffs had pleaded enough to proceed because they alleged a software defect connected to the vehicle problems, and a software defect can qualify as a workmanship defect. The court left the ultimate factual questions about the nature of any defect for a later stage.

Implied warranty. The court granted Honda’s motion with leave to amend as to the implied-warranty claims. The court concluded that the plaintiffs had not adequately alleged contractual privity—the required legal relationship between the parties—or a valid exception to that requirement under the relevant state laws. The complaint repeatedly asserted legal conclusions that privity existed or that an exception applied, but did not provide supporting facts. Because the court resolved the claims on the privity issue, it did not address Honda’s alternative arguments concerning merchantability or the duration of the implied warranty.

Equitable relief. The court granted Honda’s motion without leave to amend as to the equitable-relief claims. It dismissed the requests for injunctive relief because the plaintiffs sought monetary compensation but did not allege that they lacked an adequate legal remedy or identify future harm requiring an injunction. The court also dismissed the unjust-enrichment claim because the plaintiffs did not identify the law under which they sought that relief.

Disposition and Next Steps

Judge Haywood S. Gilliam, Jr. granted in part and denied in part Honda’s motion to dismiss as follows:

- The motion was denied as to the statutory fraud claims. - The motion was granted without leave to amend as to the fraudulent concealment or fraudulent omission claims. - The motion was denied as to the breach-of-express-warranty claim. - The motion was granted with leave to amend as to the breach-of-implied-warranty claims. - The motion was granted without leave to amend as to the equitable-relief claims.

The court allowed any permitted amended complaint to be filed within 28 days of the order, subject to the plaintiffs’ obligations under Rule 11. The court also stated that the plaintiffs could not add new causes of action or defendants in an amended complaint.