Rojas v. Bosch Solar Energy Corp.

Citation: 386 F. Supp. 3d 1116Docket: Case No. 18-cv-05841-BLF

Court: District Court, N.D. California; May 29, 2019; Federal District Court

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Defendant Bosch Solar Energy Corporation filed a motion to dismiss the first amended complaint (FAC) from Plaintiffs Steve and Andrea Rojas, citing failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The court, after reviewing the arguments and legal standards, granted the motion in part and denied it in part, allowing for an opportunity to amend the complaint.

The Plaintiffs claim that they were misled by a representative from a company named Sullivan regarding the quality and performance of Bosch solar panels, which were said to last at least twenty years and produce 80-90% of their rated power over that time. In October 2012, the Plaintiffs entered a Prepaid Solar Power Agreement with Kilowatt Systems, LLC, paying $25,339.22 for the installation of forty-two Bosch solar panels, which were installed in March 2013.

Bosch panels come with a Limited Warranty covering defects in material and workmanship for ten years and performance guarantees of at least 90% output within ten years and 80% within 25 years. These warranties transfer to subsequent buyers if the panels are not modified or relocated. The "Consumer" is defined as the final user who first operates the panels. Warranty claims must be filed within three months of awareness of a potential warranty issue and must include the original bill of sale and proof of defect or performance failure. Performance is measured under specific test conditions, with the Consumer responsible for maintaining these conditions to substantiate claims.

Bosch Solar Energy Corp. has a limited warranty that obligates it, at its discretion, to either replace a defective solar module, remedy defects, or refund the unamortized purchase price if warranty conditions are met. If tests confirm the module meets performance standards or if failures result from non-covered conditions, Bosch is entitled to recover testing costs from the claimant. Any disputes related to the warranty are governed by Michigan law. In April 2017, Bosch recalled 28,000 roof-mounted solar panels due to a defect in solder joints that could generate excessive heat, posing fire risks, although this recall did not include ground-mounted installations. Plaintiffs claim the solder joint defect also poses risks for ground-mounted systems and assert that the panels have a defective backsheet, which protects against moisture. The Rojas requested a replacement under the Bosch Recall Notice, but Bosch did not comply despite assurances. The Rojas notified Bosch of the warranty breach and sought replacement panels. Plaintiffs filed a putative class action on September 24, 2018, alleging breach of warranty and unfair competition for all U.S. purchasers of Bosch solar panels. They later bought the panels from Kilowatt and filed an amended complaint on January 4, 2019, asserting multiple claims, including breaches of express warranty and violations of California's unfair competition law and consumer protection act. Bosch has moved to dismiss these claims under Rule 12(b)(6) for failure to state a claim. The legal standard for this dismissal requires that the complaint contains sufficient factual matter to suggest a plausible claim for relief, allowing the court to infer liability based on the allegations presented.

Plaintiffs' claims are categorized into two groups: Claims 1, 2, and 3, and Claims 4, 5, and 6. The first group involves allegations against Defendant Bosch for breaching the express Limited Warranty under common law (Claim 1), the Magnuson-Moss Warranty Act (Claim 2), and California Commercial Code § 2313 (Claim 3). Plaintiffs argue that Bosch has breached the Product Warranty due to defects in solder joints and delamination, as well as the Performance Warranty due to a degradation in power output below what was promised. These claims specifically pertain to Bosch's c-Si M 60 NA30119 Panels.

The second group of claims (Claims 4, 5, and 6) relates to Warranty Claim Verification and Procedure. Plaintiffs assert these requirements are impossible to meet as the Limited Warranty does not disclose adequate testing procedures to satisfy "standard test conditions," and that compliance would be prohibitively costly. Consequently, they allege that these requirements are unconscionable, violate California's Unfair Competition Law (Claim 4), result in unjust enrichment to Bosch (Claim 5), and infringe upon California's Consumer Legal Remedies Act (Claim 6). Unlike the first group, these claims apply to all Bosch solar panel models.

Furthermore, the Court notes that despite the Limited Warranty stipulating that disputes are governed by Michigan law, Plaintiffs primarily base their claims on California law and contend that the choice of law provision is "unenforceable and unconscionable," a challenge that Bosch does not contest in its motion. 

Regarding Claims 1, 2, and 3, the Court assumes Claim 1 is under California law for the purpose of addressing motions to dismiss. Plaintiffs must clarify if they are asserting claims under multiple states’ laws. Claim 2 is derived from Claim 1 and is associated with the Magnuson-Moss Warranty Act, providing a federal claim for state law warranty breaches. For Claims 1 and 3, Bosch contends that they should be dismissed due to lack of pleading privity of contract or reasonable reliance, failure to provide required notice of warranty claims, the limitation of consequential damages in the Limited Warranty, and insufficient facts to support the breach of the Performance Warranty.

Privity or reliance is no longer a strict requirement for pleading a breach of express warranty under California law, as established in In re Nexus 6P Prod. Liab. Litig. The court recognized a shift in California's legal landscape, moving away from older precedents that demanded proof of privity or reliance. This change aligns with the adoption of the Uniform Commercial Code (UCC), which does not necessitate such proof. The court cited Weinstat v. Dentsply Int'l, Inc., which clarified that an express warranty could arise from affirmations or descriptions that form part of the bargain, regardless of when they were communicated—potentially even after payment. Additionally, a presumption exists that a seller's affirmations are integral to the bargain unless proven otherwise. In Nexus, the plaintiffs' allegations regarding Huawei's written Limited Warranty were deemed sufficient to establish that these affirmations were part of the bargain, despite some plaintiffs not purchasing directly from Huawei. The court concluded that enforcing a privity requirement would undermine the intent of the warranty and allow Huawei to evade its obligations. Previous cases cited by the defendant, Bosch, did not convince the court to alter its interpretation of California law.

Defendant cites case law requiring either privity or reliance to establish a breach of express warranty claim under California law. However, several interpretations suggest reliance is not necessary if privity is absent. The Court finds Plaintiffs' claims sufficient, as they allege that specific affirmations about the solar panels were included in the Limited Warranty, which extends to all end users. Defendant counters that Plaintiffs’ failure to receive the Limited Warranty negates this presumption. While prior rulings indicate that a warranty may still be considered part of the bargain if delivered post-purchase, the Court is reluctant to apply this where the warranty was never received. Plaintiffs assert that the warranty's terms were relayed by a representative, Berg, but must provide more detailed allegations regarding Berg’s statements. Consequently, the motion to dismiss Claims 1 and 3 is granted, with leave for Plaintiffs to amend their claims.

Regarding notice requirements, Defendant argues that Plaintiffs failed to allege proper notice under California law. California Commercial Code stipulates that buyers must notify sellers of any breach within a reasonable timeframe to seek remedies. However, if claims are against a manufacturer rather than a seller, pre-suit notice is not necessary. Plaintiffs appear to fit this exception, as they are suing Bosch as the manufacturer of the solar panels, with no direct dealings with Bosch, instead interacting with third-party sellers.

Defendant contends that an exception to the statutory pre-suit notice requirement does not apply because Plaintiffs contacted Defendant directly, although this contact was solely in relation to a recall. Defendant has not cited any cases indicating that the exception is inapplicable in such circumstances. Consequently, Defendant failed to prove that California's pre-suit notice requirement is relevant, leading to the denial of the motion to dismiss Claims 1 and 3 on this basis.

Regarding the Limited Warranty, it stipulates that claims for breach must be submitted within three months of the event that notifies the consumer of a potential claim. Plaintiffs assert that their notice obligation was triggered in 2017 when they learned about the recall of their solar panels and experienced a significant increase in their electric bill. They also claim to have requested a replacement from Bosch and provided written notice of the warranty breach. However, these allegations lack detail regarding the specifics and timing of the notice given to Bosch, rendering them insufficient to demonstrate compliance with the warranty's notice requirement.

Plaintiffs argue that they should be excused from the notice requirement due to unconscionability, which encompasses both procedural and substantive elements. While they describe the 90-day notice period as outrageous, they fail to provide factual support for this claim. Thus, the motion to dismiss Claims 1 and 3 is granted with leave to amend, as Plaintiffs have not substantiated their compliance or provided valid reasons for non-compliance.

On the issue of consequential damages, Defendant claims that the Limited Warranty bars any recovery for such damages. The warranty explicitly limits Bosch's liability to the purchase price paid and excludes any consequential, incidental, or punitive damages. Plaintiffs argue that this limitation is unconscionable, but the Court holds that even if the provision is enforceable, it does not warrant dismissal of any claims at this stage, as the unavailability of certain relief does not affect the viability of the underlying causes of action.

Defendant contends that the prohibition on consequential damages precludes Plaintiffs from pursuing Claims 1 and 3 because they were aware of the alleged defects when purchasing the solar panels and cannot seek costs like replacement. The Court declines to dismiss these claims at this stage based solely on Defendant's brief argument, stating that it will not rule out the possibility of Plaintiffs recovering any damages related to breach of express warranty. Consequently, the motion to dismiss Claims 1 and 3 is DENIED, with the Court not expressing any opinion on whether consequential damages are indeed barred under the Limited Warranty.

Regarding the breach of the Performance Warranty, Defendant argues that Plaintiffs' allegations are too vague. However, Plaintiffs have provided specific allegations about promised power levels and a significant increase in electric bills, which sufficiently inform Defendant of the breach claim. Therefore, the motion to dismiss Claims 1 and 3 for inadequate allegations of a Performance Warranty breach is also DENIED.

For Claim 2 under the Magnuson-Moss Warranty Act (MMWA), which is based on Claim 1 for breach of express warranty, the outcome of Claim 2 is tied to Claim 1. Since Claim 1 is not dismissed, Claim 2 similarly stands. However, Claim 2 is also subject to dismissal due to Plaintiffs' failure to meet the statutory pre-suit notice requirement, which mandates providing the warrantor an opportunity to cure the breach. Plaintiffs assert that they notified Bosch of the breach and allowed a chance to cure, but this does not satisfy the pre-suit notice requirement outlined in 15 U.S.C. § 2310(e). Plaintiffs appear to concede their failure to provide this notice but argue that it is not necessary for class actions under the MMWA.

Plaintiffs argue that the statutory language differentiates between individual claims that may not be "brought" and class actions that may not "proceed" without prior notice and opportunity to cure, as outlined in 15 U.S.C. 2310(e). They contend that a class action can be initiated without pre-suit notice, provided it does not advance until such notice is given. However, this interpretation has been consistently rejected by numerous district courts in the Ninth Circuit, which interpret 2310(e) as requiring pre-suit notice and opportunity to cure before a class action can be initiated under the Magnuson-Moss Warranty Act (MMWA). 

Plaintiffs also allege that their MMWA claim arises not only from warranty non-compliance under 2310(e) but also from violations of 15 U.S.C. 2304(b)(1), which sets federal minimum standards for express warranties. The warranty in question is explicitly labeled as a "Limited Warranty," which precludes a valid claim under 2304(b)(1). Consequently, the court granted the motion to dismiss Claim 2 with leave to amend.

Claims 4, 5, and 6 challenge the Warranty Claim Verification and Procedure as unconscionable. Claim 4 alleges violations of California's Unfair Competition Law (UCL) due to Bosch's imposition of additional consumer duties, arguing that such practices violate 2304(b)(1) of the MMWA. However, since the warranty is a "Limited Warranty," Plaintiffs cannot substantiate this claim. Plaintiffs also claim that the Warranty Claims Procedure is "unfair" and that Bosch's failure to disclose associated costs constitutes "fraudulent" conduct under UCL.

Claim 5, for unjust enrichment, asserts that consumers did not expect to incur testing costs to enforce warranty claims, which Bosch has not covered. Claim 6, under the Consumer Legal Remedies Act (CLRA), addresses unfair or deceptive practices in consumer transactions, citing established legal precedents.

Prohibited acts under California law include misrepresentation of transaction rights and the inclusion of unconscionable provisions in contracts. Plaintiffs allege that the Defendant violated the California Consumer Legal Remedies Act (CLRA) by incorporating such provisions in its Limited Warranty, specifically regarding proof of claim and standard test conditions. Most claims, except for one related to the Magnuson-Moss Warranty Act (MMWA), stem from these allegedly unconscionable and fraudulent practices. 

Defendant argues that the claims under the Unfair Competition Law (UCL) and CLRA are insufficient as Plaintiffs have not shown actual loss of money or property, nor concrete harm resulting from the alleged unfair practices. To establish a claim under these statutes, Plaintiffs must demonstrate that the challenged conduct caused them real injury. The Plaintiffs have not claimed that the provisions were enforced against them, and their assertions of injury are based on hypothetical scenarios rather than concrete facts.

Additionally, the claim of unjust enrichment is challenged on the grounds that Plaintiffs did not demonstrate that Defendant received and retained benefits at their expense. Plaintiffs cited a specific payment made for a solar power system, but did not provide evidence of inequitable retention of benefits. Consequently, the motion to dismiss the claims under UCL and CLRA is granted with leave for amendment, and the unjust enrichment claim is also inadequately supported.

Plaintiffs claim that Bosch profited from the sale of solar panels, arguing that Bosch's enrichment occurred at their expense since they paid the purchase price from which Bosch derived profit. However, these allegations are deemed conclusory, lacking factual support that Bosch received any part of the purchase price. Plaintiffs further assert that they incurred testing costs to assert warranty claims, costs Bosch should have covered, but again do not provide facts to substantiate these expenses. The court finds that the conclusory nature of the allegations is insufficient to support a claim for unjust enrichment, leading to the dismissal of this claim with leave to amend. 

Defendant also argues for dismissal of claims related to allegedly unconscionable warranty provisions, asserting that Plaintiffs have not shown procedural or substantive unconscionability. The court notes that while it need not address this argument due to other grounds for dismissal, the allegations regarding procedural unconscionability are weak. Plaintiffs must demonstrate an inequality of bargaining power and lack of meaningful choice, which they fail to do by not showing a lack of alternative sources for solar panels. The court encourages Plaintiffs to amend their allegations regarding unconscionability. 

Lastly, Defendant contends that Plaintiffs lack standing to sue regarding models other than the Bosch c-Si M 60 NA30119 panels installed at their property, referencing relevant case law.

In the case No. C 10-01044 JSW, 2011 WL 159380 (N.D. Cal. Jan. 10, 2011), the district court dismissed claims related to food products not purchased by the plaintiff, distinguishing it from the current case involving multiple solar panel models by Bosch, where plaintiffs allege similar unconscionable warranty terms across models. The court will not dismiss claims based on other models for this reason. Additionally, the defendant argues against the court's personal jurisdiction over claims from non-resident putative class members due to conduct unrelated to California, referencing Bristol-Myers Squibb Co. v. Superior Court. The court decided to defer this jurisdictional issue as it does not completely bar litigation in California, noting the plaintiffs' First Amended Complaint (FAC) has multiple deficiencies. The order states that the motion to dismiss is partially granted and partially denied, allowing for amendments by June 19, 2019, but restricting amendments to the defects addressed in the order; new claims or parties cannot be added without court permission.