ORDER
MYRON T. STEELE, Chief Justice.
This 22nd day of July 2010, upon consideration of the briefs of the parties, and given our standard of review it appears to the Court that the judgment of the Superior Court should be affirmed on the basis of and for the reasons set forth in its Orders dated February 19, 2010, February 25, 2010, and March 10, 2010.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior Court is AFFIRMED.
en Williams contacted Defendants about problems with the replacement bed prior to filing the instant action, the notice itself mentions moisture, not mold. That said, it appears that the Karen Williams provided sufficient notice "to let the seller know that the transaction [was] still troublesome and must be watched" even if the word
mold was not used specifically.
See UCC § 2-607 Official Comment 4.
While the parties dispute whether Defendants responded adequately to such notice, Defendants do not argue that the remaining named Plaintiffs do not plead pre-suit notice adequately. However, Defendants do contend that Plaintiffs have not pled adequate notice to Select Comfort that they were acting on behalf of a plaintiff class prior to filing suit. The MMWA provides that no private action may be brought unless the defendant first is afforded a reasonable opportunity to cure its failure to comply, and in the case of a purported class action, "such reasonable opportunity will be afforded by the named plaintiffs and they shall at that time notify the defendant they are acting on behalf of the class." 15 U.S.C. § 2310(e).
Plaintiffs contend that Karen Williams's letter served as proper pre-suit notice on behalf of the class. The letter addresses in detail the mold found in Bryan Williams' mattress, describes the health problems that he and his girlfriend suffered that purportedly stemmed from the mold, expresses outrage at the moisture found in the replacement bed provided by Defendants, and finally requests that Select Comfort reimburse Williams for expenses totaling $32,000. TAC, Ex. C. However, nothing in the letter states or even implies that Williams is acting on behalf of a purported plaintiff class. Id. (inquiring how "without a recall notice . . . WE the consumers [are] supposed to know" of the mold problems, but never indicating that she was acting on behalf of a
class and specifically requesting reimbursement totaling $32,000 based upon her personal expenses including medical bills). The Court agrees with Defendants that Plaintiffs' allegations of pre-suit notice on behalf of the purported class are inadequate.
b. Select Comfort's Limited Warranty
1. Breach
"A manufacturer's liability for breach of an express warranty derives from, and is measured by, the terms of that warranty." Cipollone v. Liggett Group, Inc., 505 U.S. 504, 525, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). The express warranty at issue here provided that Sleep Number® beds would be "free from defects in materials and workmanship for a period of 20 years from the original purchase date" and that the "warranty is limited to product repair or replacement only." FAC, Ex. G. In its order dated June 5, 2009, the Court held that because Defendants offered repair or replacement goods, and when that remedy proved unsatisfactory provided full refunds to all named Plaintiffs, the buyer was provided with the "substantial value of the bargain" and thus suffered no cognizable injury. Order at 8-10; See UCC § 2-719 Official Comment 1; see also Marr Enters., Inc. v. Lewis Refrigeration Co., 556 F.2d 951, 955 (9th Cir. 1977) ("If the seller did not replace the defective parts, the purchaser was entitled to refund of the purchase price . . . mere failure to replace or repair would not cause the court to read in the general remedy provisions of the UCC [due to failure of essential purpose]"). Moreover, the Court previously has concluded that when the named Plaintiffs accepted the refund, they essentially modified the terms of the express warranty and the remedies available for breach. See UCC § 2-719 Official Comment 1 ("parties are left free to shape their remedies to their particular requirements and reasonable agreements limiting or modifying remedies are to be given effect.")
In its order dated December 4, 2009, the Court noted that Plaintiffs Schlesinger and Karen Williams had alleged for the first time in the SAC that their request for a refund was refused. Dkt. No. 70 at 13-14. While the FAC was silent as to whether Karen Williams received a refund, it stated explicitly that Schlesinger in fact did receive a refund from Select Comfort when he complained about mold. Plaintiffs offered no explanation for this directly contradictory statement of material fact as to Schlesinger or newly-alleged fact as to Karen Williams. In the TAC, Schlesinger and Karen Williams again allege that their request for a refund was refused and again fail to provide any explanation for the contradiction in their prior pleadings. TAC ¶ 60 (alleging that Karen Williams "requested in writing a refund and reimbursement for all expenses related to the moldy bed, an amount which equaled approximately $32,000.00" and that this was rejected); id. ¶ 62 (stating that "Schlesinger requested a refund and reimbursement for all expenses and property damage he sustained related to the moldy bed" and that the "demand went unanswered").
In light of these contradictions, Defendants contend that the Court need not accept these allegations as true. MTS D at 6, citing See Azadpoour v. Sun Microsys., Inc., No. 06-3272, 2007 WL 2141079, at *2 n. 2 (N.D. Cal. July 23, 2007) ("Where allegations in an amended complaint contradict those in a prior complaint, a district court need not accept the new alleged facts as true, and may, in fact, strike the changed allegations as "false and sham."), citing Hon. William W. Schwarzer, et al., Federal Civil Procedure Before Trial, § 9:223.5 (2006), citing Bradley v. Chiron Corp., 136 F.3d 1317, 1324 (9th Cir. 1998) (A trial judge has the authority to strike pleadings that are "false and sham"); Ellingson v. Burlington Northern, Inc., 653 F.2d 1327, 1329-30 (9th Cir. 1981) (Based on FRCP Rule 11); see also Jones v. Bayer Healthcare LLC, No. 08-2219 SC, 2009 WL 1186891, at *3 (N.D. Cal. May 4, 2009) (striking plaintiff's amended pleading because it was factually inconsistent with plaintiff's previous complaint); see also Stonebrae, L.P. v. Toll Bros., Inc., NO. C-08-0221 EMC, 2010 WL 114010, at *8 (N.D. Cal. Jan. 7, 2010) (holding that where allegations in an amended complaint contradict those in a prior complaint the district court need not accept the new alleged facts as true, but that when a party explains the error in a subsequent pleading or by amendment, the trial court must accord the explanation due weight), citing Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859-60 (9th Cir. 1995); seek also Jones v. Bayer Healthcare LLC, No. 08-2219 SC, 2009 WL 1186891, at *3 (N.D. Cal. May 4, 2009).
In both cases, Select Comfort's failure to provide a refund or repair the mold found in the customers' beds would constitute a potential breach of the warranty if proper notice and an opportunity to cure were provided. Because Karen Williams' allegation that she did not receive a refund for her defective replacement bed (or a second non-defective replacement) does not contradict a previous pleading, the Court will accept it as true. However, the Court will not accept Schlesinger's allegation that he did not receive a refund given Plaintiffs' past contradictory pleadings and repeated failure to provide an explanation despite the Court's express concern in its prior order. Dkt. No. 70 at 13 ("Plaintiffs offer no explanation for this directly contradictory statement of a material fact as to Schlesinger or newly-alleged fact as to Williams").
Defendants assert that they do not address Schlesinger's breach of warranty claim in their motion to dismiss because the Court previously found that it was barred by the statute of limitations. Cal. Com. Code § 2725 (setting a four-year limitations period for warranty claims); SAC ¶ 53 (alleging that Schlesinger discovered the mold in his bed in 2003, well outside the four-year limitations period). However, in the TAC, Schlesinger alleges that he found mold again on August 11, 2008. If Plaintiffs were able to explain their contradictory pleadings, a claim premised upon the date of rediscovery would not fall outside of the four year statute of limitations.
Finally, Stearns alleges for the first time that the refund she received ($1,894.25) did not compensate her for "the entire bed purchase price, the property damages she sustained or for costs associated with replacing the defective bed." TAC ¶ 64. Stearns does not distinguish between the bed purchase price and other costs (e.g., replacement bedding and shipping and handling costs) sufficiently to put Defendants on notice or make clear to the Court whether the sum of $1,894.25 compensated her fully for the original purchase price of the bed.
2. Special or Consequential Damages
The express warranty excludes recovery for "special or consequential damages." FAC, Ex. G. The enforceability of such an exclusion is addressed in the California Commercial Code, which provides in pertinent part that:
Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is invalid unless it is proved that the limitation is not unconscionable.
Limitation of consequential damages where the loss is commercial is valid unless it is proved that the limitation is unconscionable.
Cal. Com. Code § 2719(3).
In its last order, the Court concluded that the limited warranty is not procedurally or substantively unconscionable. Dkt. No. 70 at 14-16 (holding that providing a refund, even though it is not mentioned as a remedy within the limited warranty, is consistent with California public policy as expressed in the Song-Beverly Consumer Warranty Act), citing See Cal. Com. Code § 1793.2(d)(1) ("[I]f the manufacturer or its representative in this state does not service or repair the goods to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer shall either replace the goods or reimburse the buyer in an amount equal to the purchase price paid by the buyer, less that amount directly attributable to sue by the buyer prior to the discovery of the nonconformity"). Plaintiffs do not reassert their previous unconscionability argument in their opposition to the instant motion.
As discussed above, see supra II.B.1, Plaintiffs also fail to allege the causal connection between the alleged mold within the mattress and the need to replace their bedding and the Fullers' HVAC system.
Instead, Plaintiffs now argue that because the parties modified the terms of the warranty by substituting refunds for repair or replacement parts, Plaintiffs should be able to modify the terms of the warranty to include recovery of consequential and incidental damages. However, a modification to a warranty or contract requires proof of mutual assent. See Comerica Bank v. Whitehall Specialties, Inc., 352 F.Supp.2d 1077, 1081 (C.D. Cal. 2004), citing PMC, Inc. v. Porthole Yachts, Ltd., 65 Cal.App.4th 882, 887, 76 Cal.Rptr.2d 832, 834 (1998). ("[a] valid modification . . . requires proof of . . . mutual assent.") Defendants do not assent to modifying the limited warranty to provide Plaintiffs with a right to incidental or consequential damages.
Finally, Plaintiffs argue that Defendants made a misrepresentation in offering the warranty and that in turn Plaintiffs now can "back[] out of the deal." Opp. Mot. 17-18, citing Western Filter Corp. v. Argan, Inc., 540 F.3d 947, 952 (2008) ("If, prior to closing, either the seller or buyer discovers that a representation or warranty made by the other party is not true, they have grounds for backing out of the deal.") This argument is perplexing. Plaintiffs appear to assert that they can "back out" of the warranty while at the same time alleging that they are entitled to damages for breach. For this reason, and because Plaintiffs do not explain how Defendants misrepresented the warranty, the Court concludes that the warranty limits Plaintiffs' entitlement to consequential and incidental damages.
Plaintiffs attempt to state a claim under California Civil Code § 1793.2(a) in their opposition papers. However, Plaintiffs do not allege a claim for relief under § 1793.2 within the TAC, and they have not sought leave of Court to allege a new claim.
3. Negligence and Strict Products Liability
"In order to establish negligence under California law, a plaintiff must establish four required elements: (1) duty; (2) breach; (3) causation; and (4) damages." Ileto v. Glock Inc., 349 F.3d 1191, 1203 (9th Cir. 2003) (citation omitted). To prevail on a strict products liability claim, a plaintiff must show that a "manufacturer is or should have been aware that a product is unreasonably dangerous absent a warning and such warning is feasible, the manufacturer will be held strictly liable if it fails to give an appropriate and conspicuous warning." Maneely v. General Motors Corp., 108 F.3d 1176, 1179 (9th Cir. 1997), citing Burke v. Almaden Vineyards, Inc., 86 Cal.App.3d 768, 772, 150 Cal.Rptr. 419 (1978). "[R]ecovery under the doctrine of strict liability is limited solely to `physical harm to person or property." Jimenez v. Super. Ct., 29 Cal.4th 473, 482 (Cal. 2002), quoting Seely v. White Motor Co., 63 Cal.2d 9, 18 (1965).
a. Economic Loss Doctrine
As discussed above, Plaintiffs' allegations of loss and causation are insufficient. See supra II.B.1 (concluding that the Fullers fail to plead how the alleged mold in their mattresses caused the development of mold in their HVAC system and that the remaining Plaintiffs failed to plead that their former bedding had mold on it or why mold contained within their mattresses forced Plaintiffs to replace their bedding). Moreover, incidental and consequential damages are precluded under the terms of the Limited Warranty and, as discussed above, see supra II.B.2.b.2, Plaintiffs do not argue in their opposition papers that this limitation is unconscionable.
Even if the Fullers' had a valid negligence claim for property damage notwithstanding the economic loss rule, Defendants argue that this Court has no interest in a dispute between the Fullers, who are residents of Florida, and Select Comfort Retail Corporation, a Minnesota corporation. 28 U.S.C. § 1391(a). The Fullers' claims with respect to their HVAC system also are unique and inappropriate for class treatment.
b. Unreasonably dangerous product
Plaintiffs claim that the mold-inducing defect renders the mattresses an unreasonably dangerous product. They contend that the bed is designed to incubate mold — a condition which normally does not occur in beds used in their customary manner — and that the mold creates extreme danger to Plaintiffs and others similarly situated. Opp. at 16, citing TAC ¶¶ 77, 108, 135, 216, 219, 224, 231. Plaintiffs argue that this problem "is magnified by the fact that a simple straight forward instruction on notice would allow a customer/user to look inside the bed and see if mold actually exists." Opp. at 16. However, Plaintiffs' factual allegations relate almost entirely to Select Comfort's 2005 reformulation of a new mold-inhibiting agent and the fact that Select Comfort has not notified customers of the alleged defect. Plaintiffs' remaining allegations state in a conclusory fashion that the mattress was a "defective, contaminated, and dangerous product, and unsafe for the use and purpose for which it was intended when used and applied as recommended by defendants." TAC ¶ 108. Such allegations do not meet the pleading standard of Fed.R.Civ.P. 8 and need not be accepted as true. Clegg, 18 F.3d at 754-755.
c. Design Defect
Plaintiffs allege for the first time that the mold in their mattresses was caused by a design defect and that the Limited Warranty does not extend to design defects. Based on these allegations, Plaintiffs argue that they can avoid the limitations of the warranty, including its bar on recovery for incidental and consequential damages. The Limited Warranty states:
Select Comfort Corporation ("Select Comfort") warrants to the original purchaser that their Select Comfort sleep system (mattress and/or foundation) will be free from
defects in material and workmanship for a period of twenty years from the original purchase date.
FAC Ex. A (Limited Warranty) at 18 of 56. (emphasis added).
"When interpreting a contract, the plain language within the four corners of the contract must first be examined to determine the mutual intent of the contracting parties. United States v. Wetlands Water Dist., 134 F.Supp.2d 1111, 1134 (E.D. Cal. 2001). "A written contract must be read as a whole and every part interpreted with reference to the whole, with preference given to reasonable interpretations." Id. at 1135, quoting Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999), cert. denied, 531 U.S. 812, 121 S.Ct. 44, 148 L.Ed.2d 14 (2000) (citation omitted). Plaintiffs argue that the Limited Warranty's coverage of "defects in material and workmanship" does not extend to defects in design. However, despite their conclusory assertion as to the meaning of the contract, Plaintiffs do not cite legal authority for their proposed construction.
Defendants argue persuasively that the term "workmanship" is broad and includes the quality and skill that is part of the design process for the bed. Reply at 8, citing Koulajain v. Trek Bicycle Corp., No. 90-Civ-3156 (LJF), 1992 WL 28884, at *2 (S.D.N.Y. Feb. 11, 1992) (holding that "the warranty's reference to `workmanship' could refer to bicycle designs as well as to implementation of those designs in the manufacturing process."); see also In re Saturn L-Series Timing Chain Prods. Liab. Litig., MDL No. 1920, 2008 WL 4866604, at *14 (D. Neb. Nov. 7, 2008) (internal citations omitted) (concluding that "a defect related to materials and workmanship and a design defect are substantially the same in the context of [the] action" and reasoning that it would be "absurd to interpret [defendant's] written warranty as not covering any defect in materials and workmanship if the defect could simultaneously be attributable to a design implemented by the company").
The Ninth Circuit has considered the meaning of "workmanship" in the context of exclusions in insurance contracts and has concluded that "workmanship" includes defects in design. Tzung v. State Farm Fire Cas. Co., 873 F.2d 1338, 1341 (9th Cir. 1989) ("We believe instead that an unstrained interpretation of the exclusion for `faulty workmanship' includes losses caused by defects in the design and construction of the building.") Other courts have reached the opposite conclusion. See Lombard Corporation v. Quality Aluminum Products Co., 261 F.2d 336, 338-39 (6th Cir. 1958) (distinguishing between a design defect and a defect in material or workmanship), see also Brothers v. Hewlett-Packard Co., No. C-06-02254 RMW, 2007 WL 485979, at *4 (N.D. Cal. Feb. 12, 2007) ("[T]he Limited Warranty does not guarantee against design defects, it guarantees against defects in materials and workmanship . . . Unlike defects in materials or workmanship, a design defect is manufactured in accordance with the product's intended specifications.").
However, the Court need not construe the terms of the Limited Warranty at all. As discussed previously, the named Plaintiffs invoked their rights under the warranty, and Defendants provided refunds and/or replacements for the moldy mattresses. UCC § 2-719 Official Comment 1. Even if the Court were to ignore Ninth Circuit authority and conclude that the alleged design defect was not covered by the "materials and workmanship" language, these terms necessarily would include the alleged design defect at the point that Plaintiffs' recovered under the limited warranty.
This reasoning would not apply to Karen Williams, who alleges that she never received a refund for her defective replacement. Should Schlesinger explain his prior contradictory allegations with respect to his receipt of a refund he too might have a viable claim.
4. UCL
The UCL prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. Prof. Code § 17200. Accordingly, "[a]n act can be alleged to violate any or all of the three prongs of the UCL — unlawful, unfair, or fraudulent." Berryman v. Merit Prop. Mgmt., Inc., 152 Cal.App.4th 1544, 1554 (2007).
a. Statute of Limitations
Defendants contend that Plaintiffs' UCL claim is barred by the statute of limitations. A claim for relief brought pursuant to the UCL must be "commenced within four years after the cause of action accrued." Cal. Bus. Prof. Code § 17208; see also Harshbarger v. Phillip Morris, Inc., No. 02-05267 JSW, 2003 WL 23342396, at *5 (N.D. Cal. April 1, 2003). In its last order, the Court did not determine whether or not the discovery rule applied to Plaintiffs' UCL claims because Plaintiffs failed to allege when any of the individual plaintiffs actually discovered the mold in their Sleep Number® bed. According to the TAC, all of the named Plaintiffs purchased their Sleep Number® bed more than four years prior to the filing of the instant action.
Schlesinger alleges that he first discovered mold in his mattress in 2003, but that he discovered mold in his replacement parts in August 2008.
Courts have reached different conclusions as to when a UCL claim accrues. Compare Rambus Inc. v. Samsung Elecs. Co., Nos. C-05-02298 C-05-00334, 2007 WL 39374, at *3 (N.D. Cal. Jan. 4, 2007) ("[plaintiff] cannot rely upon the discovery rule for its Section 17200 claim"); Snapp Assocs. Ins. Servs., Inc. v. Malcolm Bruce Burlingame Robertson, 96 Cal. App. 4th 884, 891 (2002) ("The `discovery rule,' which delays accrual of certain causes of action until the plaintiff has actual or constructive knowledge of facts giving rise to the claim, does not apply to unfair competition actions. Thus, `the statute begins to run . . . irrespective of whether plaintiff knew of its accrual, unless plaintiff can successfully invoke the equitable tolling doctrine.'") (citation omitted), with Mass. Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 1295 (2002) (statute of limitations for a UCL claim "will probably run from the time a reasonable person would have discovered the basis for a claim").
In Karl Storz Endoscopy-Am., Inc. v. Surgical Tech., Inc., 285 F.3d 848, 857 (9th Cir. 2002), the Ninth Circuit held that claims under California Business and Professions Code § 17200 et seq. are subject to a four-year statute of limitations which begins to run on the date the cause of action accrued, not on the date of discovery. However, in Betz v. Trainer Wortham Co., 236 Fed. Appx. 253, 256 (9th Cir. May 11, 2007), another Ninth Circuit panel observed that it remains "an open question under California law whether the discovery rule applies to unfair business practices claims." Subsequently, in Broberg v. Guardian Life Ins. Co. of Am., 171 Cal.App.4th 912, 920-21, 90 Cal.Rptr.3d 225, review denied (2009), the California Court of Appeal made clear that the discovery rule applies to unfair business practice claims "based on the defendant's allegedly deceptive marketing materials and sales practices, which is simply a different legal theory for challenging fraudulent conduct and where the harm from the unfair conduct will not reasonably be discovered until a future date." However, the UCL unfair competition claim alleged here is distinguishable from that in Broberg, as Plaintiffs do not allege a UCL claim sounding in fraud or misrepresentation. In fact, on October 30, 2008, the Court dismissed Plaintiffs' previously alleged claims for concealment, intentional misrepresentation, and false advertising without leave to amend. Because Plaintiffs again fail to allege adequate
facts in support of their UCL claim, the Court need not decide whether the discovery rule tolls the statute of limitations.
b. "Unlawful" Business Practices
For an action based upon an allegedly unlawful business practice, the UCL "borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable." Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999); see also Farmers Ins. Exchange v. Superior Court, Cal. 4th 377, 383 (1992). However, allegations in support of such a claim "must state with reasonable particularity the facts supporting the statutory elements" of the alleged violation. Silicon Knights, Inc. v. Crystal Dynamics, Inc., 983 F.Supp. 1303, 1316 (N.D. Cal. 1997), quoting Khoury v. Maly's of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993). Plaintiffs' negligence and product liability claims may not constitute predicate acts for a UCL claim. See Hartless v. Clorox Co., No. 06-CV-2705, 2007 WL 3245260, at *5 (S.D. Cal. Nov. 2, 2007) (common-law claims cannot form the basis for a UCL claim). Accordingly, only Plaintiffs' warranty claims could serve as a predicate for the "unlawful" prong. For the reasons discussed above, it appears that the only plaintiff who has alleged a warranty claim adequately is Karen Williams, who alleges both that she provided pre-suit notice of the moisture found in her replacement bed and that she never received a refund or second replacement. See supra II.B.2.
c. "Unfair" Business Practices
Plaintiffs also allege a "standalone" UCL claim, see TAC ¶¶ 215-239, accusing Defendants of unfair business practices. "[A] practice may be deemed unfair even if not specifically proscribed by some other law." Cel-Tech, 20 Cal.4th at 180. However, Plaintiffs again fail to satisfy the first element of an unfair business practices claim under Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394 (2006). See Kilgore v. Keybank, ___ F.Supp.2d ___, No. C08-2958 TEH, 2010 WL 1461577, at * 8 (N.D. Cal. Apr. 12, 2010) (concluding that the Camacho unfairness standard applies within the context of a consumer unfair business practice action), citing Davis v. Ford Motor Credit Co., 179 Cal.App.4th 581, 596-98, 101 Cal.Rptr.3d 697 (Cal.App.2d Dist. 2009). In Camacho, the court stated that a viable claim for relief may exist if the following conditions are met: "1) the consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided." Camacho, 142 Cal.App.4th at 1403.
Plaintiffs allege that the substantial consumer injury here consists of the monetary expense of replacing their bedding and, in the case of the Fullers, their HVAC system. TAC ¶ 226 (referring back to allegations laying out each named plaintiff's expense for replacing bedding and the Fullers' HVAC system). While these costs are not de minimus, they are consequential and thus are barred under the Limited Warranty. See supra II.B.2.b. Accordingly, they cannot be the basis for Plaintiffs' substantial consumer injury in connection with their UCL claim. d. Available Remedies
A UCL action is equitable in nature, and damages cannot be recovered. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144 (2003). "[A] plaintiff may obtain restitution and/or injunctive relief against unfair or unlawful practices in order to protect the public and restore to the parties in interest money or property taken by means of unfair competition." State v. Altus Fin., S.A., 36 Cal. 4th 1284, 1303 (2005), quoting Kraus v. Trinity Management Services, Inc. 23 Cal.4th 116, 126, 96 Cal.Rptr.2d 485, 999 P.2d 718 (2000); see Bus. Prof. Code, § 17204. However, "[a]s amended pursuant to the 2004 voter approval of Proposition 64, the UCL in § 17204 now requires a plaintiff to establish that it has `suffered injury in fact and has lost money or property.'" Walker v. Geico General Ins. Co., 558 F.3d 1025, 1027 (9th Cir. 2009), quoting Californians for Disability Rights v. Mervyn's, LLC, 39 Cal.4th 223, 46 Cal.Rptr.3d 57, 138 P.3d 207, 209-10 (2006). As discussed above, almost all of the named Plaintiffs concede that they have received a refund for their moldy mattresses. Karen Williams does plead that she did not receive a refund or an adequate replacement when the interior of her second mattress became soaking wet. Accordingly, because the other injury-in-fact or restitution requested (replacement bedding and shipping and handling costs) is barred by the Limited Warranty's prohibition on incidental and consequential damages and Plaintiffs do not plead causation adequately, Karen Williams is the only named plaintiff who could seek restitution or injunctive relief pursuant to the UCL.
As discussed above, see supra II.B.2b.1, Schlesinger's allegation that he did not receive a refund upon request is inconsistent with his allegations in the FAC, and he fails to explain this contradiction despite the Court's explicit request for such an explanation in its order granting Defendants' motion to dismiss the SAC.
However, notwithstanding Karen Williams' ability to plead injury-in-fact, it appears that all of the named Plaintiffs lack standing to pursue injunctive relief. In order to obtain prospective injunctive relief, a plaintiff must establish that there is a "likelihood of future injury." White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). "Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief if unaccompanied by any continuing, present adverse effects." Lujan v. Defenders of Wildlife, 504 U.S. 555, 564 (1992). As Defendants point out, "Plaintiffs do not allege that they still use their beds, that they will use their beds in the future, or that they will purchase another Select Comfort bed at any time." See also Stickrath v. Globalstar, Inc., 527 F.Supp.2d 992 (N.D. Cal. 2007), quoting Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir. 1999).
The Court also notes that, "[a]s the Ninth Circuit has explained, `system-wide injunctive relief is not available based on alleged injuries to unnamed members of a proposed class. . . . Unless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief.'" Stickrath, 527 F.Supp.2d 992, 997 (N.D. Cal. 2007), quoting Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir. 1999). Because the named Plaintiffs lack standing to seek injunctive relief, so too does their purported plaintiff class.
5. Class claims
In order for a class to be certified, the class must be ascertainable. Bishop v. Saab Auto. A.B., No. CV 95-0721 JGD (JRX), 1996 WL 33150020, at *4 (C.D.Cal. Feb. 16, 1996), citing Debremaecker v. Short, 433 F.2d 733 (5th Cir. 1970). A plaintiff seeking to bring a class action has the burden of showing that: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or
defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a); see Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1176 (9th Cir. 2007). If the plaintiff demonstrates that these four requirements have been satisfied, then he or she also must show "that the action is maintainable under Rule 23(b)(1), (2), or (3)." Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997); see also Wiener v. Dannon Co., Inc., 255 F.R.D. 658, 668 (C.D. Cal. 2009).
1. Ascertainability
The TAC defines the proposed plaintiff class as follows, "[a]ll persons located within California or Florida who used and/or purchased the Sleep Number Bed® by Select Comfort from January 1, 1987 through the present and whose beds contain mold." TAC ¶ 88. Defendants argue that because the class does not exclude persons who already have received refunds or replacement parts or who have not suffered any damages at all, it is not ascertainable. The Court agrees. Defendants point out that "all persons who have merely `used' a Sleep Number bed in the past twenty-three years, regardless of frequency of use" would be members of the class. MTS D at 21. This could include hotel guests who spent a single night on a Sleep Number Bed®. "Such members have no injury and no standing to sue." Hovsepian v. Apple, Inc., No. 08-5788 JF (PVT), 2009 WL 5069144, at *6 (N.D. Cal. 2009); see also Bishop, 1996 WL 33150020, at *5 ("courts have refused to certify class actions based on similar `tendency to fail' theories because the purported class includes members who have suffered no injury and therefore lack standing to sue.").
"Class actions, we believe, must be structured so as to conform in the essential respects to the judicial process. This is the principle by which we are guided. It dictates, inter alia, that the courts not be available to those who have suffered no harm at the hands of them against whom they complain. They have no standing to sue. It is necessary, therefore, to examine the standing of the plaintiffs to initiate the class action before us." La Mar v. H B Novelty Loan Co., 489 F.2d 461, 464 (9th Cir. 1973).
2. Predominance of individual issues
Defendants also contend that in the instant case individual issues will predominate and the action will become unmanageable. They point to the differing claims of property damage even among named plaintiffs, including the Fullers' unique claim that they had to replace their HVAC system. They suggest that such claims inevitably will raise issues of causation that are individualized and do not lend themselves well to class treatment. In addition, as the Court has concluded above, recovery for the alleged damage to bedding and related shipping and handling costs appears to be precluded by the Limited Warranty's bar on consequential damages.
Defendants also assert correctly that substantial statute of limitations issues are likely to complicate the class claims. The proposed class encompasses individuals who purchased their mattresses as long as twenty years ago, with no limitation as to when such individuals may have discovered mold in their Sleep Number® beds. Even if such a limitation were incorporated in accordance with California's delayed discovery rule, there still would have to be an individualized inquiry as to each class member's individual circumstances. Plaintiffs do not respond to this concern in their opposition papers.
Finally, Defendants argue that Plaintiffs' express warranty claims are inappropriate for class treatment. The Court agrees. The express warranty claims involve elements that are individual to each purported class member, such as the provision of notice, an opportunity to cure, and reliance. Tietsworth v. Sears, No. 5:09-CV-00288 JF (HRL), 2010 WL 1268093, at *20 (N.D. Cal. Mar. 31, 2010) (citation omitted); see also Cole v. Gen. Motors., 484 F.3d 717, 724-30 (5th Cir. 2007) (explaining why certain warranty claims are inappropriate for class treatment). The TAC represents Plaintiffs' fourth attempt to plead sufficient class allegations. Each of Defendants' arguments was raised on their last motion to strike, and the Court granted that motion. Plaintiffs have not altered their class definition in response to the Court's previously expressed concerns, nor have they attempted to address the majority of Defendants' arguments in support of the instant motion to strike. Accordingly, because further attempts to amend class-wide allegations appear to be futile, the motion to strike class allegations will be granted without leave to amend.
III. MOTION FOR LEAVE TO FILE FOURTH AMENDED COMPLAINT
A. Background
Plaintiffs seek leave to file their proposed fourth amended complaint ("PFAC"). In the PFAC, Plaintiffs plead individual and class claims for negligence, strict liability, and violations of the UCL based on personal injury. Plaintiffs also substantially re-plead the allegations of the TAC. In her original complaint, Stearns alleged individual and class claims for strict product liability, breach of express and implied warranties, fraud, and negligent misrepresentation, including claims for relief based upon alleged personal injury. On October 1, 2008, the Court dismissed that complaint, struck the class claims, provided guidance on how to plead the alleged claims adequately, and encouraged Stearns to narrow the proposed class. Dkt. No. 28 at 5-6, 8, 13.
Plaintiffs did not re-allege their personal injury claims in the FAC, but they did continue to assert a nationwide class, added five named plaintiffs and one Defendant (Sleep Train), and alleged seventeen claims for relief. On June 5, 2009, the Court granted Defendants' motion to dismiss the FAC and granted limited leave to amend, specifically instructing Plaintiffs that they must seek leave of Court to add any new claims. Then, on July 6, 2009, Plaintiffs filed their SAC, which re-introduced personal injury claims. Because Plaintiffs failed to seek leave of Court to expand the scope of the FAC, the Court granted Defendants' motion to strike the personal injury claims. On January 4, 2010, Plaintiffs filed the operative TAC. On March 12, 2010, the same day that Defendants filed the instant motion to dismiss, Plaintiffs filed their motion for leave to file the PFAC.
Plaintiffs allege that Stearns, Bryan Williams, Dennis Fuller, Bonnie Fuller, Ruth Rose, and Dan Schlesinger "suffered injuries and received treatment as a result of defendants [sic] product . . ." PFAC ¶ 134. They also claim that "[t]he full nature and extent of said injuries are not known to plaintiffs and [] request[] [leave] to amend this complaint to conform to proof at time of trial." Id. The allegations of personal injury in the PFAC include the following:
(a) Molly Stearns suffered various injuries, including but not limited to, lung and pulmonary distress, lung biopsy and other lung related treatment.
(b) Bryan Williams suffered various injuries, including but not limited to lung and pulmonary distress, lung biopsy and other lung related treatment.
(c) Dennis Fuller suffered various injuries, including but not limited to skin irritation, blemishes and other skin infection treatment.
(d) Bonnie Fuller suffered various injuries, including but not limited to nasal, pulmonary distress and other lung related treatment.
(e) Ruth Rose suffered various injuries, including but not limited to skin, pulmonary distress and other lung related treatment.
(f) Dan Schlesinger suffered various injuries, including but not limited to skin, pulmonary distress and other lung related treatment.
Id. ¶ 169. Plaintiffs allege that they have incurred and will continue to incur medical expenses as a result of these personal injuries and will suffer loss of income, wages, and other pecuniary consequences.
Id. ¶¶ 135, 136, 137, 170, 171, 172.
A. Legal Standard
Federal Rule of Civil Procedure 15(a) governs the amendment of pleadings. The Ninth Circuit has held that the rule should be applied with "extreme liberality." DCD Programs, LTD. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987); Howey v. United States, 481 F.2d 1187, 1190 (9th Cir. 1973). However, leave to amend "is not to be granted automatically." Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002), quoting Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). Rather, a court must consider whether the proposed amendment (1) would be futile, (2) would prejudice the non-moving party, (3) was brought in bad faith, or (4) resulted from undue delay. Genentech, Inc. v. Abbott Labs., 127 F.R.D. 529, 530 (N.D. Cal. 1989), citing DCD Programs, 833 F.2d at 186. Absent prejudice, or a strong showing of any of the remaining factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend. See Lowrey v. Tex. A M Univ. Sys., 117 F.3d 242, 245 (5th Cir. 1997).
B. Discussion
Plaintiffs submit objections to fourteen statements made by Defendants in their opposition papers to the instant motion for leave to file the PFAC. Because it does not rely upon any of these statements in reaching its disposition of the motion, the Court need not determine the merits of the objections. However, the Court will note that the concerned statements appear to be legal arguments or characterizations of Plaintiffs' allegations based upon Defendants' legal positions.
Defendants carry the burden of showing why leave to amend should not be granted. Genentech, 127 F.R.D. at 530-31. They contend that the proposed amendments: (1) would be futile; (2) would cause them substantial prejudice; (3) are brought in bad faith; and (3) are the result of unreasonable delay.
1. Futility
"[C]ourts will determine the legal sufficiency of a proposed amendment using the same standard as applied on a Rule 12(b)(6) motion, see Miller v. RykoffSexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988), [however] such issues are often more appropriately raised in a motion to dismiss rather than in an opposition to a motion for leave to amend." SAES Getters S.p.A. v. Aeronex, Inc., 219 F.Supp.2d 1081, 1086 (S.D. Cal. 2002), citing William W. Schwarzer, et al., CAL. PRAC. GUIDE: FED. CIV. PROC. BEFORE TRIAL § 8:422); see also Centeno v. Wilson, No. 1:08-CV-1435-FJM, 2010 WL 1980157, at *1 (E.D. Cal. May 17, 2010) ("We apply the same standard for determining the legal sufficiency of a proposed amendment that we apply in deciding a Rule 12(b)(6) motion"). Because the allegations in the PFAC are nearly identical to those in the TAC — with the exception of those related to personal injuries — the parties have had a full opportunity to brief the sufficiency of Plaintiffs' pleadings. Accordingly, for the same reasons that the Court concluded above that Defendants' motion to dismiss the TAC should be granted without leave to amend (with the exception of the claims pled by the Williamses and Schlesinger), see supra II, the Court also will deny Plaintiffs' request for leave to file the PFAC as its reframing of Plaintiffs' previous claims and its class definitions suffers from almost all of the same problems.
The class definition for those plaintiffs who have not suffered personal injuries includes those persons who: (1) have received refunds or non-defective replacements of their moldy mattresses; (2) entered limited warranty agreements that bar consequential damages such as damage to their bedding and shipping and handling costs; (3) discovered mold in their mattress outside of the statute of limitations; and (4) failed to provide Defendants with notice of the defect or an opportunity to cure.
Plaintiffs' newly-framed class claims for personal injury also appear to be futile. In dismissing Stearns' original complaint, the Court noted the inherent difficulty and problems posed by class-wide personal injury claims. Dkt. 28 at 11-12, citing Kennedy v. Baxter Healthcare Corp., 50 Cal.Rptr.2d 744, 743-44 (Cal. Ct. App. 1996) ("As the California Supreme Court has observed class actions for personal injuries in mass tort litigation present a multitude of problems."); see also Zinser v. Accufix Research Inst., 253 F.3d 1180, 1186 (9th Cir. 2001) ("Our circuit has recognized the potential difficulties of `commonality' and `management' inherent in certifying products liability class actions."). The Court's previously expressed view that personal injury claims are not appropriate for class treatment has not changed since its holding almost two years ago.
In support of their individual personal injury claims, Plaintiffs allege that they have suffered various injuries, including but not limited to, lung and pulmonary distress, skin irritation, blemishes, other skin infection treatment, and other lung related treatment. PFAC ¶¶ 134, 170. Plaintiffs also plead collectively that they had to pay for "checkups, medication, diagnostic testing, biopsies, medical, surgical, and other related expenses" and that they "will be forced to pay" for these same medical expenses in the future as a result of "negligence of the defendants." Id. ¶¶ 135, 136, 170, 171. These conclusory and generalized allegations do not meet the pleading standard of Fed.R.Civ.P. 8. See Iqbal, 129 S.Ct. at 1949 ("a formulaic recitation of the elements of a cause of action will not do."); see also Clegg, 18 F.3d at 754-755 (9th Cir. 1994). Plaintiffs' allegations with respect to causation suffer from the same deficiency. See e.g., PFAC ¶¶ 134, 169 (concluding that "as a direct and proximate result of the negligence of the defendants, and each of them, plaintiff suffered grievous personal injuries . . .). However, Plaintiffs' failure to plead their personal injury claims with sufficient specificity may be cured by amendment.
Defendants contend that allowing Stearns to amend her individual personal injury claims is futile because Stearns waived these claims when she neglected to re-allege them in the FAC after her original complaint was dismissed. The Ninth Circuit recently clarified that "a plaintiff who omits previously dismissed claims from an amended complaint [does not] waive his right to reallege these claims in further amendments at the district court level." New York City Employees' Ret. Sys. v. Jobs, 593 F.3d 1018, 1025 (9th Cir. 2010). Accordingly, Stearns has not
waived her right to plead personal injury claims.
Defendants also argue that allowing Schlesinger and Bryan Williams to assert personal injury claims would be futile because the claims are barred by the applicable two-year statute of limitations. See Cal. Code. Civ. P. § 335.1. Defendants point out that Schlesinger alleges he first discovered mold in his mattress in 2003 or 2004, See PFAC ¶ 51, 61, and that Bryan Williams discovered mold in his mattress on October 22, 2006.
As noted several times previously, Schlesinger's allegations as to when he first discovered mold in his bed are inconsistent. In paragraph 51 he alleges that he first found mold in his mattress on September 23, 2004; in paragraph 61 he alleges that he first called Select Comfort with respect to mold in his bed in 2003. However, this discrepancy has no bearing on the Court's determination with respect to the statute of limitations, as both of these dates were more than two years before the commencement of the instant action.
"A cause of action normally accrues when under the substantive law the wrongful act is done and the liability or obligation arises, that is, when the action may be brought." Clark v. Upton, ___ F.Supp.2d ___, 2010 WL 1027526, at *6, (E.D. Cal. Mar. 18, 2010), quoting Mosesian v. County of Fresno, 28 Cal.App.3d 493, 500, 104 Cal.Rptr. 655 (1972). "An exception to the general rule for defining the accrual of a cause of action-indeed, the `most important' one-is the discovery rule." Id., quoting Norgart v. Upjohn Co., 21 Cal.4th 383, 397-398, 87 Cal.Rptr.2d 453, 981 P.2d 79 (1999). "[U]nder the delayed discovery rule, a cause of action accrues and the statute of limitations begins to run when the plaintiff has reason to suspect an injury and some wrongful cause, unless the plaintiff pleads and proves that a reasonable investigation at that time would not have revealed a factual basis for that particular cause of action. In that case, the statute of limitations for that cause of action will be tolled until such time as a reasonable investigation would have revealed its factual basis." Id., quoting Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 802, 27 Cal.Rptr.3d 661, 110 P.3d 914 (2005); see also Hopkins v. Dow Corning Corp., 33 F.3d 1116, 1120 (9th Cir. 1994) ("Under California's discovery rule, the accrual date of a cause of action is delayed until the plaintiff is aware of her injury and its negligent cause."). "To invoke the discovery rule, plaintiff must plead facts which show `(1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.'" Hopkins, 33 F.3d at 1120, quoting Saliter v. Pierce Bros. Mortuaries, 81 Cal.App.3d 292, 146 Cal.Rptr. 271, 274 (Ct.App. 1978)
While Schlesinger first discovered mold in his mattress in 2003 of 2004, it is unclear from the PFAC, as it is currently pled, when Schlesinger first experienced personal injuries and when he realized that these injuries were caused by the mold in his mattress. While the omission of such facts highlights a deficiency in Schlesinger's pleading of the delayed discovery rule, it also prevents the Court from making a definitive determination that Schlesinger's claim is time-barred. Bryan Williams' pleadings present a different set of alleged facts. In her letter to Defendants dated May 14, 2007, Karen Williams states that mold was discovered in the bed on October 22, 2006, that "upon discovery of the moldy bed, it was immediately removed from the home," and that "upon discovery of the moldy bed, [sic] immediately raised the question; could the MOLD found covering the inside of the Sleep Number bed possibly have had anything [sic] thing to do with the illness' [sic], lung masses and lump in the lung????? So research began, and every test imaginable was done . . ." PFAC, Ex. C; see contra PFAC ¶ 52 (alleging that the Williamses first discovered mold in the mattress on October 26, 2008). The letter makes clear that Karen and Bryan Williams suspected that the mold in the mattress was responsible for Bryan's personal injuries no later than October 22, 2006. The statute of limitations began to run on that date. Norgart, 21 Cal.4th at 397 ("Under Jolly . . . the plaintiff discovers the cause of action when he at least suspects a factual basis, as opposed to a legal theory, for its elements, even if he lacks knowledge thereof — when, simply put, he at least `suspects . . . that someone has done something wrong' to him . . ."), quoting Jolly v. Eli Lilly Co., 44 Cal.3d 1103, 1110, 245 Cal.Rptr. 658, 751 P.2d 923 (1988).
While they cite no legal authority in support of their argument, Plaintiffs appear to contend that the statute of limitations with respect to Schlesinger's and Bryan Williams' personal injury claims also should be tolled because Defendants made affirmations that the mattresses would not "incubate" or "produce" mold and were not the cause of their personal injuries. "Under California law, equitable tolling will be warranted where the defendants have induced the plaintiff to delay filing until after the statute of limitations has run." Johnson v. Riverside Healthcare System, LP, 534 F.3d 1116, 1127 (9th Cir. 2008), citing Mills v. Forestex Co., 108 Cal.App.4th 625, 652, 134 Cal.Rptr.2d 273 (2003) (citation omitted). While the PFAC presently does not allege facts that would support equitable tolling on this basis, it is not apparent at this time that Plaintiffs cannot do so.
Finally, Defendants argue that Bryan Williams cannot maintain his personal injury claim in this action because he is litigating the same claim against the same Defendants in the San Mateo Superior Court. See Declaration of Andrew V. Stearns in Support of Plaintiffs' Reply to Motion for Leave to File Fourth Amended Class Action Complaint, Ex. G (Complaint filed in Bryan Williams v. Select Comfort Retail Corp., et al, No. Civ. 477710, dated October 22, 2008). This is not so. "[O]verlapping or even identical federal and state court litigation may proceed simultaneously . . . The rule that permits simultaneous litigation in state and federal court of overlapping and even identical cases is deeply rooted in our system." Noel v. Hall, 341 F.3d 1148, 1159 (9th Cir. 2003); see also Atlantic Coast Line Railroad v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970) ("[T]he state and federal courts had concurrent jurisdiction in this case, and neither court was free to prevent either party from simultaneously pursuing claims in both courts."). However, concurrent state and federal litigation of identical claims is "limited . . . by doctrines of abstention and comity." Noel, 341 F.3d at 1159. Accordingly, while Bryan Williams may maintain two separate lawsuits that allege identical claims, the Court notes that it too may abstain from ruling on his claims while they are pending before the state court.
Bryan Williams filed his personal injury claim in state court on October 22, 2008. While this fact establishes that Defendants did not induce him to delay filing beyond October 22, 2008, it is unclear from the PFAC when the alleged tolling of the statute of limitations began.
Accordingly, while Plaintiffs' individual personal injury claims are not pled with the detail required by Fed.R.Civ.P. 8, Defendants have not shown that allowing Plaintiffs to amend
these particular claims would be futile.
Defendants do not otherwise challenge the futility of the personal injury claims brought by Rose or Dennis Fuller. Defendants do contend that Bonnie Fuller's allegations of personal injuries are inconsistent with prior pleadings because she neglected to assert these same injuries in the SAC. However, Bonnie Fuller's prior silence on the topic of personal injuries does not contradict her assertion of them now.
Defendants also assert a passing challenge to venue with respect to the Fullers (who are Florida residents) in a footnote of their opposition papers to Plaintiffs' motion for leave to file the PFAC. This is an inappropriate vehicle for raising a motion to dismiss for lack of venue. If Defendants wish to challenge venue as to the Fullers they may do so in a future properly noticed motion.
2. Prejudice
To overcome Rule 15(a)'s liberal policy with respect to the amendment of pleadings a showing of prejudice must be substantial. Genentech, 127 F.R.D. at 530-31. Neither delay resulting from the proposed amendment nor the prospect of additional discovery needed by the non-moving party in itself constitutes a sufficient showing of prejudice. Genentech, 127 F.R.D. at 530-32; United States v. Continental Ill. Nat'l Bank and Trust Co. of Chicago, 889 F.2d 1248, 1255 (2d Cir. 1989). Nonetheless, "[d]istrict courts do not abuse their discretion when they deny motions to amend that would cause undue delay and prejudice." Dong Ah Tire Rubber Co., Ltd. v. Glasforms, Inc., No. C 06-3359 JF (RS), 2009 WL 667171, at *2 (N.D. Cal. Mar. 10, 2009), citing Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798 (9th Cir. 1991); see also Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999) ("A need to reopen discovery and therefore delay the proceedings supports a district court's finding of prejudice from a delayed motion to amend").
Defendants contend that they will suffer prejudice if Plaintiffs are allowed to file a fifth complaint because rather than conducting an investigation, Plaintiffs have "repeatedly insisted on bringing the broadest, everything-but-the-kitchen-sink claims possible and have insisted on attempting to maintain the suit as an unworkable class action, in an attempt to expand this case into something it is not, thereby necessitating Defendants' successive motions to dismiss and strike. Defendants argue that at some point, forcing [them] to again incur thousands of dollars to dismiss the complaint becomes prejudicial and unfair." Opp. Mot. At 24. Moreover, Defendants argue that in the two years since litigation has commenced, much of the property that Plaintiffs claim has been destroyed by mold has been lost or altered, making Defendants ability to defend against such claims more difficult. Finally, Defendants argue that permitting Plaintiffs to add personal injury claims will change the gravamen of the case, resulting in prejudice to Defendants. See Morongo Band of Mission Indians, 893 F.2d 1074, 1079 (9th Cir. 1990) ("The new claims set forth in the amended complaint would have greatly altered the nature of the litigation and would have required defendants to have undertaken, at a late hour, an entirely new course of defense. Again, this factor is not fatal to amendment, DCD Programs, Ltd., 833 F.2d at 186, but it enters into the balance.")
Plaintiffs contend that they will suffer prejudice if they are not permitted to amend to plead their personal injury claims, but they do not address Defendants' concerns. Plaintiffs also argue that they need not seek leave to plead these claims because a "plaintiff is not prohibited from realleging claims" that he has omitted in previous pleadings. Reply at 10. However, this Court limited the scope of any amendment in its order dismissing the FAC, and consistent with that order, Plaintiffs were required to make the instant motion.
The Court acknowledges the expense incurred by Defendants in defending this action and their frustration with litigating Plaintiffs' four failed attempts to state a claim upon which relief may be granted. However, Plaintiffs have attempted to plead individual personal injury claims only on one prior occasion. Moreover, Defendants' continued expense in litigating the action will be mitigated by the fact that the Court will deny leave to amend with respect to all of Plaintiffs' class allegations. See supra II.B, III.B.1.
While Plaintiffs technically did allege personal injury claims in the SAC as well as their original complaint, the Court did not address the allegations in the SAC substantively or provide guidance with respect to their sufficiency because they were new claims pled without leave of Court. Dkt. 70 at 9-10 (dismissing Plaintiffs' personal injury claims and explaining that the Court's prior order granted limited leave to amend and stated clearly that "Plaintiffs shall not add any new defendants, plaintiffs or claims for relief without leave of the Court.")
3. Bad Faith
"Examples of bad faith have included-but are not limited to-instances in which a party makes a claim without alleging any newly discovered facts, makes a tactical decision to omit a claim to avoid summary judgment, or includes a claim to harass or burden the other party." E.g., Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 1989); Acri v. International Ass'n of Machinists Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir. 1986); M/V American Queen v. San Diego Marine Const. Corp., 708 F.2d 1483, 1492 (9th Cir. 1983). Defendants argue that Plaintiffs chose not to allege their personal injury claims in the FAC in a tactical move to preserve their class claims and counsel's fees, but "now that Plaintiffs' hopes of bringing a class action have faded, they have brought individual personal injury claims, gambling that something will go forward." Opp. Mot. At 23. Moreover, Defendants argue that it is "bad faith for B. Williams to assert a personal injury claim because he has an identical claim pending in California state court against Select Comfort." Id. at 23 n. 18.
While the pendency of Bryan Williams's state court claim raises the possibility of duplication of resources or conflicting determinations, it does not establish bad faith. Plaintiffs argue that Defendants have been on notice of Plaintiffs' personal injury claims through their customer complaints, original pleading and SAC, and communications between counsel. The Court concludes that Plaintiffs' pleading practice does not rise to the level of bad faith.
4. Delay
While delay alone will not justify the denial of leave to amend, DCD Programs, 833 F.2d at 186, "`late amendments to assert new theories are not reviewed favorably when the facts and the theory have been known to the party seeking amendment since the inception of the cause of action.'" Dong Ah Tire Rubber Co., 2009 WL 667171, at *3, quoting Acri v. International Ass'n of Machinists Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir. 1986) (citations omitted). Plaintiffs first alleged personal injury claims in their original complaint and then attempted to allege the same claims in their SAC. Accordingly, it does not appear that Plaintiffs purposefully or negligently delayed in pleading personal injury claims. In fact, with the exception of the FAC, Plaintiffs have attempted to plead personal injury claims consistently. Accordingly, although it will deny their motion for leave to file the PFAC in its present form, the Court will grant Plaintiffs leave to amend their individual personal injury claims.
IV. ORDER
Good cause therefor appearing, Defendants' motions to strike Plaintiffs' class allegations and dismiss the TAC are GRANTED as set forth herein. Plaintiffs' motion for leave to file the PFAC is DENIED. Plaintiffs may file a new pleading limited to their individual personal injury claims, as well as Karen and Bryan Williams' claims for negligence, strict product liability, breach of express warranty, and violations of the MMWA. Schlesinger may attempt to explain the factual contradictions with respect to his warranty claims. Any such pleading shall be filed within thirty (30) days of the date of this order. Plaintiffs shall not add any new defendants, plaintiffs or claims for relief without leave of Court.
IT IS SO ORDERED.