Swearingen v. General Motors LLC, a Delaware limited liability company

Background

Thomas William Swearingen and Margaret Mary Swearingen alleged that they bought a new 2020 Chevrolet Bolt from an authorized dealer and agent of General Motors in California. They alleged that General Motors marketed the Bolt as safe and functional and advertised a 259-mile range on a full charge. They further alleged that the Bolt had defective lithium-ion battery modules that could overheat, reduce the vehicle’s range, and create a fire risk. General Motors later issued a recall notice warning that the battery could ignite when nearing a full charge and imposing limits on charging, mileage, and indoor parking.

The complaint asserted three causes of action under the Song-Beverly Consumer Warranty Act, a fourth cause of action for fraud, and a fifth cause of action under California Business and Professions Code section 17200, California’s Unfair Competition Law. The motion addressed the fourth cause of action and the fraudulent-practices part of the fifth cause of action.

Pleading standards

The court applied Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint fails to state a legally valid claim. It also applied Rule 9(b), which requires fraud to be pleaded with particularity, including the who, what, when, where, and how of the alleged misconduct. Fraud-based claims under California’s Unfair Competition Law must also satisfy Rule 9(b)’s particularity requirement.

Fraud claims

General Motors argued that the complaint did not identify how, where, to whom, or by what means the alleged misrepresentations or concealment occurred. It also argued that the plaintiffs had not adequately pleaded justifiable reliance or facts showing when and how General Motors knew about the alleged defects.

The court agreed that the complaint did not meet Rule 9(b)’s requirements. It described the allegations as boilerplate and conclusory and found that the complaint did not identify the specific content of the allegedly false representations, the General Motors employees who made them, the advertisements or marketing materials on which the plaintiffs relied, or whether General Motors knew of the defect when the vehicle was sold. The court also found that intent to defraud and justifiable reliance were alleged only conclusorily.

The court dismissed the fraud claim and the fraudulent-practices part of the Unfair Competition Law claim for lack of factual support. Because the pleading deficiencies could potentially be cured with additional facts, the court granted leave to amend and ordered the plaintiffs to file a first amended complaint by November 17, 2023.

Arguments the court did not resolve as a matter of law

General Motors argued that the alleged 259-mile range was an Environmental Protection Agency estimate and therefore could not support a fraud claim. The court explained that advertising an EPA estimate is not, by itself, a misrepresentation, but stated that other marketing statements—such as statements that the Bolt was safe and functional for normal use—could potentially constitute misrepresentations. The court therefore did not dismiss the misrepresentation theory as a matter of law if the plaintiffs could adequately plead statements beyond the range estimate.

General Motors also argued that the economic-loss rule barred the fraudulent-concealment claim because the plaintiffs sought economic damages. The court declined to decide at this stage that the rule barred the claims as a matter of law and said General Motors could raise and further brief the issue in later dispositive motions.

General Motors further argued that the concealment claim failed because the plaintiffs did not buy the Bolt directly from General Motors and did not allege a direct transaction or fiduciary relationship. The court treated the allegation that the plaintiffs bought the Bolt from a General Motors authorized dealer and agent as true for purposes of the motion. It held that the relationship between the dealer and General Motors was a factual issue and that dismissal on this ground was inappropriate at the pleading stage. General Motors could raise and further brief the issue in later dispositive motions.

Disposition

The court granted General Motors’ motion to dismiss. It dismissed the plaintiffs’ fourth cause of action for fraud and the fraudulent-practices part of their fifth cause of action under California Business and Professions Code section 17200, with leave to amend. The order did not state that the other causes of action were dismissed.