BARAKEZYAN v. BMW OF NORTH AMERICA LLC 100 (2018)

MEMORANDUM **

Norik Barakezyan appeals the dismissal with prejudice of his class action alleging that BMW’s carbon ceramic brakes (“CCBs”) were defective and thereby breached BMW’s express warranty and the implied warranty of merchantibility, and violated California’s Unfair Competition Law (“UCL”), California Business & Professions Code section 17200. We review de novo, Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015), and we reverse and remand for further proceedings.

1. Barakezyan’s Second Amended Complaint (“SAC”) contains adequate, plausible allegations that the CCB defect was a manufacturing defect and thereby violated BMW’s express warranty. The fact that the SAC alleges that all BMW CCBs exhibit the defect does not preclude the defect from being a manufacturing defect—under California law a manufacturing defect encompasses instances where products differ, even uniformly, from a manufacturer’s intended result or design. Barker v. Lull Eng’g Co., 20 Cal. 3d 413, 429, 143 Cal.Rptr. 225, 573 P.2d 443 (1978); see also Escola v. Coca Cola Bottling Co., 24 Cal. 2d 453, 459, 150 P.2d 436 (1944); Garrett v. Howmedica Osteonics Corp., 214 Cal.App.4th 173, 153 Cal.Rptr.3d 693, 706–07 (2013); In re Coordinated Latex Glove Litig., 99 Cal.App.4th 594, 121 Cal.Rptr.2d 301, 315 (2002), as modified on denial of reh’g (July 15, 2002). The SAC meets that standard by alleging that BMW’s CCBs have tension relief cracks, deviating from BMW’s design. And furthermore, the SAC does not allege an entirely uniform CCB defect because it states that the defect manifests at different mileages, temperatures, and severities—allegations which must be taken as true when adjudicating a motion to dismiss.

2. Barakezyan’s Third Amended Complaint (“TAC”) sufficiently alleges that the CCB defect constitutes a substantial safety hazard and thereby breaches the implied warranty of merchantibility. See Mexia v. Rinker Boat Co., 174 Cal.App.4th 1297, 95 Cal.Rptr.3d 285, 289 (2009). Taking the allegations as true, the CCBs, when engaged, emit an extremely loud, long, high-pitched noise, which has, on numerous occasions, distracted Barakezyan and other BMW drivers, as well as nearby pedestrians. That, along with allegations that the noise is intermittent and manifests at different mileages, meaning that the noise has the potential to surprise, at least plausibly pleads a safety hazard, even if the danger is somewhat less than that caused by a malfunctioning sunroof that opens on a highway and causes a blizzard of papers. Cf. Brand v. Hyundai Motor Am., 226 Cal.App.4th 1538, 173 Cal.Rptr.3d 454, 459, 461 (2014).¹ Barakezyan need not wait for a dangerous situation to occur to vindicate his right to a vehicle free of substantial safety hazards.

3. As BMW admits, because Barakezyan sufficiently pleaded violations of express and implied warranties, he sufficiently pleaded a violation of the unlawful prong of the UCL. Berryman v. Merit Prop. Mgmt., Inc., 152 Cal.App.4th 1544, 62 Cal.Rptr.3d 177, 185–86 (2007). BMW also admitted at oral argument that, as for the UCL’s fraudulent prong, sufficiently pleading a substantial safety hazard caused by a defect for merchantibility is also sufficient under a duty to disclose theory, as pleaded here.

Finally, as for the UCL’s unfair prong, the TAC is sufficient under either test. Taking the allegations as true, the CCB’s price premium, acquired through failing to disclose a substantial safety hazard, is a substantial consumer injury. That injury is not reasonably avoidable by consumers and there is no countervailing benefit to consumers or competition by BMW failing to disclose its allegedly defective and dangerously loud CCBs. See Daugherty v. Am. Honda Motor Co., 144 Cal.App.4th 824, 51 Cal.Rptr.3d 118, 130 (2006), as modified (Nov. 8, 2006). And those same facts constitute an anticompetitive business practice harmful to consumers. See Belton v. Comcast Cable Holdings, LLC, 151 Cal.App.4th 1224, 60 Cal.Rptr.3d 631, 640–41 (2007). Since the TAC alleges that other CCB manufacturers make non-defective CCBs, the fact that those manufacturers fail to make a disclosure is irrelevant.

REVERSED; REMANDED FOR FURTHER PROCEEDINGS.

FOOTNOTES

1.   We also note that the district court cited no authority for the rule that noise alone cannot constitute a safety hazard, and no such authority has been presented or located on appeal.