Plaintiffs’ Class Action Rat Race Comes To An End

Jul 31, 2018 | Topics: Class Actions, Warranty

Toyota finally scores a knockout after the fourth amended complaint in a class action involving allegations that Toyota sold vehicles with soy-coated wires that attracts rodents, was dismissed with prejudice.  In Heber v. Toyota Motor Sales U.S.A., Inc., et al., 21 plaintiffs, proceeding on behalf of themselves and the class, alleged 69 claims for relief under the laws of numerous jurisdictions including causes of action for violations of the Magnuson-Moss Warranty Act, breach of express warranty, breach of implied warranty, fraud, and unjust enrichment, alleging that the soybean covered wiring in certain Toyota vehicles was defective because it attracted rodents to gnaw on it, causing damage to the vehicles and increasing the risk of car accidents.  This article will focus on the Court’s treatment of plaintiffs’ express and implied warranty claims.  

Toyota moved to dismiss several of the plaintiffs’ causes of action for failure to state a claim.  As to the express warranty claims, Toyota argued that while its warranty covers defects in materials, it does not cover not design defects.  Plaintiffs acknowledged that the weight of federal authority provides that express warranties do not cover design defects but argued that they were not alleging a design defect.  Instead, plaintiffs argued the soy wiring itself was a defect in material under the express warranty because it attracts rodents.  Citing McCabe v. Am. Honda Motor Co., 100 Cal. App. 4th 111, 1120 (2002), the court noted that “[a] design defect…exists when the product is built in accordance with its intended specifications, but the design itself is inherently defective.”  Here, plaintiffs clearly alleged a design defect—that the decision to use soy wiring is a problem across the board—not that any individual wire was anomalously defective.  Thus, the Court dismissed plaintiffs’ express warranty claim. 

As for the implied warranty claims, Toyota argued that plaintiffs’ could not show that the vehicles were “unmerchantable” (i.e. the vehicles were unfit for their ordinary purposes) when they were sold.  Plaintiffs’ argued that the vehicles contained a “latent” defect when Toyota sold them and had they known of the soy wiring "defect" at the time of purchase they would not have purchased the Class vehicles or would have paid significantly less for them.  The Court found that assuming a latent defect might give rise to an implied warranty claim, a latent defect must be some defect within the vehicle itself.  Plaintiffs’ implied warranty claim relies on the actions of a third party—the rodents.  Only after the rodents do their part by chewing on the wires does the vehicle become inoperable (if at all).  Thus, plaintiffs were asking the court to stretch the implied warranty of merchantability to include some promise that no external actor would later harm their vehicles.  The Court declined to extend the doctrine that far.  Since plaintiffs failed to allege Toyota sold them vehicles unfit to be driven, the Court dismissed their implied warranty of merchantability claim.