Kearns v. Ford Motor Company

567 F.3d 1120 (9th Cir. 2009)


P brought this diversity class action for himself and those similarly situated claiming that Ford Motor Company (D) and its dealerships acted illegally to increase sales of their Certified Pre-Owned (CPO) vehicles, in violation of California's Consumers Legal Remedies Act (CLRA), and California's Unfair Competition Law (UCL). CPO vehicles are late model used vehicles, which D purports to put through a rigorous inspection process in order to certify that the vehicle's safety, reliability, and road-worthiness surpass non-certified used vehicles. D sells these cars at a premium above that charged for ordinary used cars. D charges each dealership (1) an annual fee for the CPO program and (2) a per-vehicle fee for each vehicle in the program. The dealership is supplied with marketing materials, instructional guides, and access to the CPO database, which allows the dealerships to print standard 'Maroney-type' window stickers. D pays to promote, market, and advertise the CPO program through a variety of print, broadcast, online, and other media. Local dealerships are responsible for the implementation of the sale and service of CPO vehicles. P claims that D makes false and misleading statements concerning the safety and reliability of its CPO vehicles. P claims that D conspires to mislead class members into believing that the CPO program guarantees a safer, more reliable, and more roadworthy used vehicle and that CPO vehicles are safer due to the certification process. This CPO 'peace of mind,' costs $1,080 dollars, an amount P claims exceeds the benefit of this 'peace of mind.' P alleges that D has failed to disclose the very little oversight it has over the certification process. Kearns claims that Ford misrepresents (1) the quality of the complete repair and accident-history report; (2) the level of training of CPO technicians; and (3) the rigorous certification inspection. P argues that the inspection is not rigorous; the warranty does not cover all components; and the CPO vehicles are not any safer, more reliable, or more roadworthy than a regular used vehicle. P filed this suit in California state court. It was removed to federal court for diversity jurisdiction under 28 U.S.C. § 1332(d). At issue is P’s third amended complaint. D filed a motion to dismiss for failure under Rule 9(b)’s heightened pleading standards. The court dismissed the case, and P appealed. P argues that his claims should not be subject to Rule 9(b), because (1) California state law precedent is contrary to Rule 9(b); (2) some of his claims are not based in fraud; and (3) the complaint should have been evaluated under the unfairness prong of the UCL instead.