Wieg v. General Motors LLC

Background

Mary and Stanley Wieg sued General Motors LLC concerning their purchase of a new 2019 Chevrolet Bolt. They alleged that General Motors marketed the Bolt as safe, functional, and capable of traveling 259 miles on a full charge, even though its lithium-ion battery could overheat, create a fire risk, and substantially reduce the vehicle’s range.

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

The Wiegs alleged that General Motors knew about the battery defect and concealed it, that they relied on General Motors’ advertising when buying the Bolt, and that they would not have bought the vehicle—or would have paid significantly less—if they had known the truth. They sought damages and other relief, including replacement of the vehicle or restitution, incidental and consequential damages, attorney’s fees, civil penalties, and punitive damages.

Legal standards

General Motors moved under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a legally sufficient claim for relief. Because the claims were based on fraud, Federal Rule of Civil Procedure 9(b) also required the complaint to describe the alleged misconduct with particularity, including the who, what, when, where, and how of the alleged fraud.

Under California law, fraud requires a misrepresentation or concealment, knowledge that the statement was false, an intent to induce reliance, justifiable reliance, and resulting damages. A fraudulent-concealment claim also requires a duty to disclose the concealed fact.

Court’s analysis

The court agreed that the complaint did not satisfy Rule 9(b). It described the allegations as boilerplate and conclusory and found that the Wiegs did not identify the specific content of the allegedly false representations, the General Motors employees who made them, or the particular advertisements or marketing materials on which they relied. The complaint also did not clearly allege whether General Motors knew about the battery defect when the vehicle was sold. The allegations of intent to defraud and justifiable reliance were also conclusory.

The court declined at this stage to rule that the economic-loss rule barred the fraudulent-concealment claim as a matter of law. That rule generally limits a purchaser whose product does not work properly to contract remedies when the claimed losses are economic. The court noted that the cited decisions were nonbinding district court decisions and that the California Supreme Court had not addressed whether intentional concealment constitutes an independent tort in the circumstances presented.

The court also declined to dismiss the fraudulent-concealment claim solely because the Wiegs bought the Bolt from an authorized dealer rather than directly from General Motors. A fraudulent-concealment claim requires a relationship giving rise to a duty to disclose. The court treated as true the allegation that the dealer was General Motors’ authorized dealer and agent, and it concluded that the nature of that relationship was a factual issue inappropriate for resolution on a motion to dismiss.

Disposition

The court granted General Motors’ motion to dismiss. It dismissed the Wiegs’ fourth cause of action for fraud and the fraudulent portion of their fifth cause of action under California Business and Professions Code section 17200, with leave to amend. The court ordered the Wiegs to file their first amended complaint no later than November 17, 2023. The opinion was issued by Susan Illston, United States District Judge.