Flier v. FCA US LLC

[4] 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA [7] 8 RICHARD FLIER, et al., Case No. 21-cv-02553-CRB 9 Plaintiffs, ORDER DENYING MOTION FOR 10 v. JUDGMENT ON THE PLEADINGS 11 FCA US LLC, 12 Defendant. 13 Plaintiffs Richard and Patricia Flier (“Plaintiffs”) purchased a 2017 Chrysler Pacifica from 14 Defendant FCA US, LLC (“FCA”), which they allege manifested defects with its 9HP 15 transmission and Power Control Module (“PCM”) that include “stalling, loss of crankshift position 16 synchronization, shifting problems, acceleration problems, and/or loss of power.” Compl. (dkt. 117 5, Ex. A)1 ¶ 14. This is one of a slew of cases brought in California by the same plaintiffs’ 18 attorneys over FCA’s 2017 Chrysler Pacifica.2 That vehicle was recalled several times in 2018 19 because of issues related to the PCM and manual park release. Id. ¶¶ 11, 25; Mot. (dkt. 47) at 14– 20 15. 21 Plaintiffs assert breaches of implied and express warranties under California’s Song22 Beverly Consumer Warranty Act (“Song-Beverly Act”), violations of the California Consumer 23 Legal Remedies Act (“CLRA”), and fraud by omission. See generally Compl. FCA removed the [25] 1 The complaint is Exhibit A to the Notice of Removal. See Notice of Removal (“NOR”) (dkt. 1) ¶ 2 . [26] 2 See, e.g., Scherer v. FCA US, LLC, No. 20-cv-02009-AJB-BLM, 2022 WL 11381676 (S.D. Cal. Oct. 19, 2022); Driz v. FCA US, LLC, No. 22-cv-01605-BLF, 2022 WL 4348470 (N.D. Cal. [27] Sept. 19, 2022); Cox v. FCA US LLC, No. 20-cv-3098-DMG (Ex), 2020 WL 2857489 (C.D. Cal. 1 case to this Court, asserting diversity jurisdiction. NOR ¶¶ 35, 37. Plaintiffs moved to remand 2 over the amount in controversy, which the Court denied. Mot. to Remand (dkt. 13); Order on 3 Mot. to Remand (dkt. 21). FCA now moves for judgment on the pleadings on Plaintiffs’ CLRA, 4 fraud by omission, and punitive damages claims.3 See generally Mot. FCA argues that Plaintiffs 5 have failed to plead their fraud and CLRA claims with sufficient specificity under Rule 9(b) of the 6 Federal Rules of Civil Procedure, and that the economic loss rule bars Plaintiffs’ fraud by 7 omission claim. 8 The Court DENIES the motion, but without prejudice as to the fraud by omission claim. 9 The Ninth Circuit has certified to the California Supreme Court the question of whether the 10 economic loss rule applies to fraudulent omission claims. While this Court holds that the 11 economic loss rule does not foreclose Plaintiffs’ fraud by omission claim, if the California 12 Supreme Court decides differently, the Court will permit FCA to renew its motion as to the fraud 13 claim. 14 I. BACKGROUND 15 A. Factual Background 16 On or about October 2016, Plaintiffs purchased a new 2017 Chrysler Pacifica vehicle (the 17 “Vehicle”), manufactured by FCA, relying on their interactions with sales representatives and 18 FCA’s marketing materials. Compl. ¶¶ 9, 19. 19 Within a year of their purchase, Plaintiffs’ Vehicle manifested various operational 20 problems: illumination of the dash and check engine lights, a lack of shift control, the transmission 21 and acceleration “kicking,” gears skipping, problems with the PCM and Transmission Control 22 Module, “evap” leaking, failure of the purge valve, sudden losses of power, squeaking noises, 23 stalling, jolting, hiccupping, and “other defects enumerated in the Vehicle’s repair history.” Id. 24 ¶¶ 11, 49. Plaintiffs took the Vehicle to FCA’s California representative for repairs in accordance 25 with FCA’s warranty, but these visits failed to remediate the problems. Id. ¶ 43. Plaintiffs allege 26 that some or all of the issues are caused by the Vehicle’s defective 9HP transmission and PCM, [27] 1 which allegedly may cause a loss of power while driving at highway speeds, stalling, and a loss of 2 control while merging lanes. Id. ¶¶ 14–15, 22. Plaintiffs therefore assert that the PCM Defect is a 3 serious safety concern. Id. ¶ 15. 4 In 2018, FCA issued three recalls: one for the manual park release, and two to reprogram 5 the PCM. Id. ¶ 11; see also Safety Recall U50, NHTSA 17V-395, Manual Park Release (June 6 2018), available at https://static.nhtsa.gov/odi/rcl/2018/RCRIT-18V395-2580.pdf; Safety Recall 7 U64, NHTSA 18V-332, Reprogram Powertrain Control Module (June 2018), available at 8 https://static.nhtsa.gov/odi/rcl/2018/RCRIT-18V332-9115.pdf; Safety Recall U01, NHTSA 18V9 049,4 Reprogram Powertrain Control Module (revised Mar. 2018), available at https://static.nhtsa 10 .gov/odi/rcl/2018/RCRIT-18V049-9906.pdf.5 Plaintiffs then brought this action in state court, 11 alleging that FCA failed to conform the Vehicle to its express and implied warranties after a 12 reasonable number of repair attempts, in violation of the Song-Beverly Act. Compl. ¶¶ 28, 35, 43, 13 47. Plaintiffs further allege that FCA knew that the Vehicle was defective prior to the sale, yet 14 actively concealed this from Plaintiffs. Id. ¶¶ 52–55, 63–69. Plaintiffs allege that FCA had 15 superior knowledge of the PCM Defect “at the time of sale [to Plaintiffs] and thereafter” through 16 various informational avenues: pre- and post-production testing data, early consumer complaints [18] 4 The complaint references Safety Recall 18V-048, a recall that FCA points out is “[un]related to the Subject Vehicle.” Compl. ¶¶ 25–26; Mot. 14–15, 15 n.3. This appears to be a clerical error, as [19] Safety Recall 18V-048 relates to an entirely different FCA make and model. See Mot. 15 n.3. It appears that Plaintiffs attempt to reference Safety Recall 18V-049, which involved the [20] “repackaged version of . . . the [2017 Chrysler Pacifica] T23 software update” that they reference. See Compl. ¶¶ 25–26; Mot. at 15 & n.3. Generously construing the complaint, the Court reads the [21] reference to Safety Recall 18V-48 to refer to Safety Recall 18V-049. Brach v. Newsom, 6 F.4th 904 , 925 (9th Cir. 2021) (“[T]he allegations of a complaint must be generously construed in the [22] light most favorable to the plaintiff.”). 5 Rule 12(d) requires a court examining a motion under Rule 12(c) either to exclude matters [23] outside the pleadings, or to treat the motion as one for summary judgment. Fed. R. Civ. P. 12(c)– (d). However, “[a] court may . . . consider certain materials—documents attached to the [24] complaint, documents incorporated by reference in the complaint, or matters of judicial notice— without converting the [Rule 12(c) motion] into a motion for summary judgment.” United States [25] v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Documents are subject to incorporation by reference if they form the basis of the complaint. Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 26 988, 1002 (9th Cir. 2018). The complaint explicitly references and relies upon “Recalls T23, U64 and/or U50” as the basis of Plaintiffs’ claims. Compl. ¶¶ 11, 25–26. Because the recalls form the [27] basis of the complaint, they are subject to incorporation by reference, and the Court may consider 1 about the PCM Defect, testing performed in response to these complaints, warranty repair and part 2 replacement data, and FCA’s recalls. Id. ¶¶ 11, 17–18, 21, 24–25. 3 B. Procedural Background 4 FCA removed the case to federal court based on diversity jurisdiction, asserting complete 5 diversity of citizenship and an amount in controversy of at least $123,272.79. NOR ¶¶ 25, 33–35. 6 On October 4, 2021, the Court denied Plaintiffs’ motion to remand. Order on Mot. to Remand. 7 On September 27, 2022, FCA moved for judgment on the pleadings on Plaintiffs’ fraud by 8 omission, CLRA, and punitive damages claims. Mot. Plaintiffs opposed the motion on October 9 11, 2022, and Defendants replied on October 18, 2022. Opp’n (dkt. 49); Reply (dkt. 52). The 10 Court finds this matter suitable for resolution without oral argument. See Civil Local Rule 7-1(b). 11 II. LEGAL STANDARD 12 A. Rule 12(c) 13 Under Rule 12(c) of the Federal Rules of Civil Procedure, “[a]fter the pleadings are 14 closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” 15 “[S]ubstantially identical” analyses apply to motions for judgment on the pleadings and Rule 16 12(b)(6) motions to dismiss. Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012). Thus, 17 to survive a Rule 12(c) motion, a complaint must “contain sufficient factual matter, accepted as 18 true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662 , 678 19 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007)). Conclusory statements and 20 “formulaic recitation[s] of the elements of a cause of action” are not enough. Twombly, 550 U.S. 21 at 555 . 22 B. Rule 9(b) 23 Under Rule 9(b), fraud claims must satisfy a heightened pleading standard. Fed. R. Civ. P. 24 9(b). The party alleging fraud “must state with particularity the circumstances constituting fraud 25 or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged 26 generally.” Id. Rule 9(b) demands that supporting allegations “be ‘specific enough to give 27 defendants notice of the particular misconduct . . . so that they can defend against the charge and 1 1019 (9th Cir. 2001) (citing Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)). Thus, 2 “averment of fraud must be accompanied by the ‘who, what, when, where, and how’ of the 3 misconduct charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) 4 (citing Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). 5 III. DISCUSSION 6 FCA moves for judgment on the pleadings as to Plaintiffs’ fraud by omission, CLRA, and 7 punitive damages claims. As explained below, the Court concludes that Plaintiffs have pleaded 8 their fraud by omission and CLRA claims with sufficient particularity under Rule 9(b). Therefore, 9 Plaintiffs’ CLRA and punitive damages claims survive, and the fraud by omission claim turns on 10 the applicability of the economic loss rule. Because recent authority persuades the Court that the 11 rule does not apply to fraudulent omission claims, the Court finds that Plaintiffs have sufficiently 12 pleaded all elements of their fraud by omission claim. Accordingly, the Court DENIES FCA’s 13 motion for judgment on the pleadings, but without prejudice as to Plaintiffs’ fraud by omission 14 claim. FCA may raise the issue again if the California Supreme Court reaches a different 15 conclusion on the economic loss rule. 16 A. Fraud by Omission 17 As an initial matter, the parties dispute the applicable pleading standard. FCA argues that 18 Plaintiffs must plead their fraud by omission and CLRA claims with particularity under Rule 9(b). 19 See Mot. 5–10; Reply at 2–3. Plaintiffs maintain that omission-based claims “can succeed without 20 the same level of specificity required by a normal fraud claim.” Opp’n at 13 (citing Baggett v. 21 Hewlett-Packard Co., 582 F. Supp. 2d 1261, 1267 (C.D. Cal. 2007) (quoting Falk v. Gen. Motors 22 Corp., 496 F. Supp. 2d 1088 , 1098–99 (N.D. Cal. 2007))). Plaintiffs are incorrect. 23 In the Ninth Circuit, fraudulent omission claims, like any other fraud claim, must be 24 pleaded with particularity under Rule 9(b). Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th 25 Cir. 2009) (quoting Vess, 317 F.3d at 1103–04) (“[I]f ‘the claim is said to be “grounded in fraud” 26 . . . the pleading of that claim as a whole must satisfy the particularity requirement of Rule 27 9(b).’”). The cases that Plaintiffs cite are distinguishable, and hold that the particularity standard 1 See Falk, 496 F. Supp. 2d at 1098–99; In re Apple & AT & TM Antitrust Litig., 596 F. Supp. 2d 2 1288, 1310 (N.D. Cal. 2008); see Opp’n at 13. In all other respects, Rule 9(b) is the governing 3 pleading standard for Plaintiffs’ fraudulent omission claim. See Kearns, 567 F.3d at 1127 . 4 Alternatively, Plaintiffs argue that they have satisfied Rule 9(b). Opp’n at 13 (citing 5 Cooper, 137 F.3d at 627 ). FCA disagrees. Mot. at 5–10; Reply at 3–4. The elements of 6 fraudulent inducement by concealment are (1) concealment of a material fact, (2) a duty to 7 disclose, (3) intent to defraud, (4) reliance, and (5) damages. Jones v. ConocoPhillips Co., 198 8 Cal. App. 4th 1187 , 1198 (Cal. Ct. App. 2011). FCA argues that Plaintiffs have failed to plead the 9 first three elements—concealment of a material fact, a duty to disclose, and intent to defraud— 10 with particularity. Mot. at 6–10. FCA also argues that the economic loss rule bars pleading the 11 last element, damages. Id. at 11–15. 12 1. Pleading Under Rule 9(b) 13 a. Concealment of a Material Fact 14 FCA argues that the complaint fails to specify any defect, and merely lists symptoms. Id. 15 at 12; see Compl. ¶¶ 14–15. FCA argues that such allegations lack particularity under Rule 9(b). 16 Mot. at 12. Plaintiffs respond that the PCM Defect is an unreasonable safety risk and therefore a 17 material omission, but otherwise fail to respond to FCA’s argument regarding the insufficiency of 18 pleading the PCM Defect under Rule 9(b). Opp’n at 9–10; see also Mot. at 13–14. Plaintiffs have 19 nonetheless adequately pleaded the PCM Defect. 20 Some courts within this District have followed the approach of In re Ford Motor Co. DPS6 21 Powershift Transmission Products Liability Litigation, which held that a “mere[] descri[ption of] 22 performance problems with the vehicle” failed to plead an alleged defect with specificity. 483 F. 23 Supp. 3d 838, 847 (C.D. Cal. 2020) (holding that plaintiffs failed to plead the alleged defect where 24 the complaint provided that the vehicle transmission “consistently slips, bucks, kicks, jerks, 25 harshly engages, has premature internal wear, sudden acceleration, delay in downshifts, delayed 26 acceleration, difficulty stopping the vehicle, and, eventually, permanent transmission failure”); 27 Mot. at 12; see also, e.g., Farrales v. Ford Motor Co., No. 21-cv-07624-HSG, 2022 WL 1239347 , 1 judgment on the pleadings where plaintiff “merely describe[d] performance problems,” “d[id] not 2 identify the affected components,” and did not “explain why it would be reasonable to assume that 3 the[] symptoms [we]re all caused by the same defect”). But others have held that identifying the 4 defective part, its resulting symptoms, and that the plaintiffs sought repairs from the defendant 5 multiple times pleads the existence of a defect with requisite specificity under Rule 9(b). See, e.g., 6 Edwards v. FCA US LLC, No. 22-cv-01871-WHO, 2022 WL 1814144 , at *3–5 (N.D. Cal. June 2, 7 2022) (holding that analogous facts adequately pleaded active concealment of a defect under Rule 8 9(b)); White v. FCA US LLC, No. 22-cv-00954-BLF, 2022 WL 3370791 , at *1, *6 (N.D. Cal. 9 Aug. 16, 2022) (holding that plaintiffs adequately pleaded the defect where they alleged that they 10 “returned the Vehicle to [FCA’s] authorized repair facilities” multiple times); see also Scherer v. 11 FCA US, LLC, 565 F. Supp. 3d 1184 , 1190 (S.D. Cal. 2021) (“[I]dentifying the transmission and 12 PCM as defects and describing the performance problems . . . provide[d] enough particularity to 13 detail . . . the alleged defects.”). 14 Here, the complaint identifies the specific parts causing operational issues—the 9HP 15 transmission and PCM—their symptoms, and alleges that Plaintiffs sought repairs from FCA on 16 more than one occasion. Compl. ¶ 43. Moreover, by pleading FCA’s recalls over the 2017 17 Chrysler Pacifica’s PCM, the complaint goes beyond merely describing the symptoms of an 18 existing defect. Id. ¶¶ 25–26. The Court finds these allegations sufficient, even under Rule 9(b)’s 19 heightened pleading standard. See Edwards, 2022 WL 1814144 , at *3–5. At the pleading stage, 20 Plaintiffs need only allege, not prove, the existence of the PCM Defect. Scherer, 565 F. Supp. 3d 21 at 1190 (“[F]acts alleg[ing] . . . enough particularity to allow the Defendant to defend [a product] 22 . . . [it] has internal knowledge about” “aligns with Rule 9(b)’s purpose.”). Requiring anything 23 more from Plaintiffs would be impracticable without discovery. Therefore, Plaintiffs have 24 adequately pleaded this element of their fraudulent omission claim. 25 b. Duty to Disclose 26 As Plaintiffs argue, a duty to disclose arises under California law when the defendant 27 either “has exclusive knowledge of facts not known to the plaintiff,” or “actively conceals a 1 Cal. App. 4th 326, 337 (Cal. Ct. App. 1997)); Opp’n at 10–13. Plaintiffs need not plead exclusive 2 knowledge; it is generally sufficient to plead that defendants have superior knowledge, and that 3 the information was not “reasonably discoverable by the plaintiffs.” Anderson v. Apple Inc., 500 4 F. Supp. 3d 993 , 1014–15 (N.D. Cal. 2020). 5 FCA argues that the complaint fails to plead either alternative with sufficient specificity. 6 Mot. at 8–10. As to exclusive knowledge, FCA argues that the complaint pleads no facts 7 indicating that FCA had any knowledge, let alone exclusive knowledge, of the PCM Defect prior 8 to selling the Vehicle to Plaintiffs on or around October 1, 2016. Id. at 13–15. Particularly, FCA 9 argues that consumers’ post-sale complaints and 2018 recalls fail to plead FCA’s pre-sale 10 knowledge of the PCM Defect between January 2016, when FCA debuted the 2017 Chrysler 11 Pacifica, and October 1, 2016, the date of sale to Plaintiffs. Id. at 14–15. Plaintiffs’ opposition 12 focuses on the complaint having set forth “extensive allegations concerning [FCA’s] sources of 13 superior knowledge” of the defect. Opp’n at 11; see also Compl. ¶¶ 20, 26, 54. 14 FCA’s arguments are unavailing. First, the complaint does allege FCA’s pre-sale 15 knowledge: it alleges that FCA had aggregate pre-market, and pre- and post-production data on 16 the PCM Defect. Compl. ¶¶ 17, 21. Moreover, FCA’s argument that “[a]ny alleged customer 17 complaints in 2017 and 2018 are irrelevant to Plaintiffs’ claims” mischaracterizes the complaint. 18 Mot. at 14. The complaint alleges that early consumer complaints about the 2017 and 2018 19 Chrysler Pacifica models, which FCA routinely reviews, indicate that FCA had knowledge about 20 the PCM Defect. Compl. ¶ 21. Finally, early consumer complaints, testing conducted in response 21 to the complaints, and warranty repair and part replacements after sale of the Vehicle to Plaintiffs 22 still raise an inference of superior knowledge pre-sale. See, e.g., Edwards, 2022 WL 1814144 , at 23 *4 (finding that a nearly identical complaint from the same plaintiffs’ attorney regarding FCA’s 24 2017 Chrysler Pacifica pleaded exclusive knowledge of the PCM Defect under Rule 9(b)); In re 25 MyFord Touch Consumer Litig., 46 F. Supp. 3d 936, 958 (N.D. Cal. 2014) (finding that early 26 complaints, servicing requests, and a technical service bulletin issued a few months after 27 distribution of an allegedly defective product raised a reasonable inference of defendant’s 1 also Compl. ¶¶ 17, 21, 25. Again, Plaintiffs need only plead, not prove, the elements of their fraud 2 claim. 3 Because Plaintiffs have adequately pleaded that FCA had exclusive knowledge of the 4 defect, they have sufficiently pleaded that FCA had a duty to disclose the PCM Defect. 5 c. Intent to Defraud 6 FCA argues that the complaint merely pleads conclusory allegations of intent without 7 alleging any supporting facts. Mot. at 15–16. Plaintiffs respond that the complaint alleges facts 8 raising the inference that FCA intentionally failed to disclose the PCM Defect in order to induce 9 their reliance in purchasing the Vehicle. Opp’n at 15. 10 Under California law, a plaintiff may demonstrate a defendant’s intent to defraud by 11 showing that the defendant induced the plaintiff’s reliance. See Robinson Helicopter Co. v. Dana 12 Corp., 34 Cal. 4th 979, 990 (Cal. 2004). The complaint pleads FCA’s inducement of Plaintiffs’ 13 reliance with sufficient particularity. The complaint alleges that FCA concealed a material defect, 14 that it had pre-sale knowledge of the PCM Defect, and that Plaintiffs relied on FCA’s 15 advertisements and interactions with sales representatives in purchasing the Vehicle. See Compl. 16 ¶¶ 14, 16–19; see also Falk, 496 F. Supp. 2d at 1099 (“Plaintiffs show knowledge of falsity and 17 intent to defraud by pleading facts that demonstrate that [the defendant] knew about the alleged 18 defects, yet did nothing to fix them or to alert customers.”). Additionally, Plaintiffs point out that 19 FCA has failed to respond to their arguments on reliance. Opp’n at 14–15; see also Mot. 20 Therefore, Plaintiffs have adequately pleaded all of the elements of their fraud by omission 21 claim. 22 2. Economic Loss Rule 23 Finally, FCA argues that the complaint fails to plead the damages element of fraud by 24 omission, because Plaintiffs have alleged no “appreciable, non-speculative, present personal injury 25 or property damage independent of [their] alleged economic loss.” Mot. at 9. Plaintiffs argue that 26 that principle, known in California as the “economic loss rule,” does not apply to fraudulent 27 omission claims, citing the California Supreme Court’s decision in Robinson Helicopter, 34 Cal. 1 In Robinson Helicopter, the California Supreme Court explained that the economic loss 2 rule prevents recovery of damages for the “value, costs of repair and replacement of the defective 3 product . . . without any claim of personal injury or damages to other property.” 34 Cal. 4th at 988 4 (quoting Jimenez v. Superior Court, 29 Cal. 4th 473, 482 (Cal. 2002)). However, the court noted 5 that “a party’s contractual obligation may create a legal duty[,] and that a breach of that duty may 6 support” tort damages. Id. at 989 (citing Erlich v. Menezes, 21 Cal. 4th 543, 551 (Cal. 1999)). 7 Therefore, “[t]ort damages have been permitted in contract cases where . . . the contract was 8 fraudulently induced.” Id. at 989–90 (quoting Erlich, 21 Cal. 4th at 551–52). Focusing “solely on 9 the fraud[ulent] . . . misrepresentation claim” at hand, the court then held that the economic loss 10 rule did not bar the claim, reasoning that it was tortious conduct independent of the defendant’s 11 breach of the contract. Id. 990–91. The court declined to “address the issue of whether . . . 12 intentional concealment constitutes an independent tort,” and stressed that its “narrow” holding 13 was “limited to . . . affirmative representations on which a plaintiff relies and which expose a 14 plaintiff to liability for personal damages independent of the plaintiff’s economic loss.” Id. at 991, 15 993. 16 In light of Robinson Helicopter’s “narrow” holding, the Ninth Circuit in 2021 recognized 17 that there is “no controlling precedent in the California Supreme Court’s decisions” on whether the 18 economic loss rule bars fraudulent omission claims, and certified the question to the California 19 Supreme Court. Rattagan v. Uber Techs., Inc., 19 F.4th 1188, 1189, 1193 (9th Cir. 2021), 20 granting the request for certification, Rattagan v. Uber Techs., Inc., S272113 (Cal. 2022).6 21 Recently, a California Court of Appeal held that the economic loss rule does not bar fraudulent 22 omission claims, noting that California federal district courts have split on the question. See 23 Dhital v. Nissan N. Am., Inc., A162817, 2022 WL 14772909 , at *8–9 (Cal. Ct. App. Oct. 26, 24 2022). The court reasoned that the overall gist of the plaintiffs’ fraudulent inducement claim [25] 6 Neither party has moved to stay this case in light of the pending California Supreme Court [26] decision. Other courts in this District have recently gone ahead and decided the issue, even though the question has been certified. See Edwards, 2022 WL 1814144 , at *7 (holding that the [27] economic loss rule does not bar fraudulent omission claims and denying FCA’s motion to 1 alleged “presale conduct by Nissan (concealment) that [wa]s distinct from Nissan’s alleged 2 subsequent conduct in breaching its warranty obligations.” Id. at *8. Therefore, under Robinson 3 Helicopter—which, the Court of Appeal noted, did not explicitly limit its holding to fraudulent 4 affirmative misrepresentations—the economic loss rule did not bar the plaintiffs’ claim at the 5 pleading stage. Id. at *9. 6 The Court finds this reasoning persuasive. As another court in this District has observed, 7 “a fraudulent omission leading to adopting a contract is just as [intentional and] ‘above and 8 beyond’ the breach of contract as a fraudulent affirmative misrepresentation.” Edwards, 2022 WL 9 1814144, at *7. Accordingly, the Court DENIES FCA’s motion for judgment on the pleadings as 10 to Plaintiffs’ fraud by omission claim, but without prejudice. If the California Supreme Court 11 reaches a different conclusion on the applicability of the economic loss rule, FCA may bring 12 another motion as to Plaintiffs’ fraud by omission claim. 13 B. CLRA & Punitive Damages 14 The parties agree that Plaintiffs’ CLRA claim tracks their fraudulent omission claim. See 15 Mot. at 11; Opp’n at 19–20. The parties disagree, however, on whether the CLRA claim is 16 subject to Rule 9(b), or a relaxed pleading standard. See Mot. at 10; Opp’n at 20. 17 Again, Plaintiffs unpersuasively challenge Rule 9(b) as the pleading standard for their 18 CLRA claim. See Opp’n at 20. FCA correctly points out that the Ninth Circuit has held that when 19 plaintiffs rely on a “course of fraudulent conduct . . . as a basis of [their CLRA] claim[],” they 20 must “satisfy the requirements of Rule 9(b).” Kearns, 567 F.3d at 1125 . Therefore, Plaintiffs 21 must plead their CLRA claim with particularity. 22 Plaintiffs next argue that they have done so. Opp’n at 19–20. The CLRA prohibits “unfair 23 methods of competition and unfair or deceptive acts or practices undertaken by any person in a 24 transaction intended to result or which results in the sale of goods or services to any consumer.” 25 Kearns, 567 F.3d at 1125 (quoting Cal. Civ. Code § 1770 ). Conduct “likely to mislead a 26 reasonable consumer violates the CLRA.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136 , 1140 27 (9th Cir. 2012) (internal citation and quotation marks omitted). Under California law, such 1 Am. Honda Motor Co., 144 Cal. App. 4th 824, 835 (Cal. Ct. App. 2006). Because Plaintiffs 2 adequately pleaded that FCA had a duty to disclose the PCM Defect but failed to do so, thereby 3 inducing their reliance, they have adequately pleaded their CLRA claim. See Falk, 496 F. Supp. 4 || 2d at 1097 (denying defendant’s motion to dismiss plaintiffs’ CLRA claim where they adequately 5 || pled defendant’s duty to disclose the defect). And because Plaintiffs’ CLRA claim survives, so 6 || does their claim for punitive damages. See Cal. Civ. Code § 1780 (a)(4) (“Any consumer who 7 suffers any damage as a result of the use or employment by any person of a method, act, or 8 || practice declared to be unlawful by Section 1770 may bring an action. . . to recover . . . [p]unitive 9 || damages.”). 10 Therefore, the Court DENIES the motion as to Plaintiffs’ CLRA and punitive damages 11 claims. 12 || Iv. CONCLUSION 5 13 For the foregoing reasons, the Court DENIES the Motion for Judgment on the Pleadings, 14 || without prejudice. FCA may renew the motion, as to Plaintiffs’ fraud by omission claim only, if 3 15 the California Supreme Court reaches a different conclusion on the applicability of the economic a 16 || loss rule. 17 IT IS SO ORDERED. 18 Dated: November 8, 2022 CHARLES R. BREYER 19 United States District Judge