ORDER REGARDING MOTION TO DISMISS AND MOTION TO STRIKE

Re: Dkt. Nos. 69, 70.

WILLIAM H. ORRICK, District Judge.

INTRODUCTION

For the fourth time, defendants Windsor Surry Company, d/b/a WindsorONE, and Windsor Willits Company, d/b/a Windsor Mill (collectively "Windsor") move to dismiss plaintiff McLane Cover's complaint alleging misrepresentations regarding WindsorONE trim board, a housing trim product. In response to an earlier motion, I conducted an extensive choice of law analysis and determined that Rhode Island law applies to Cover's claims. Cover's third amended complaint ("TAC") both adds to and changes prior allegations, asserting that Cover is resident of Massachusetts and not Rhode Island and that he reviewed Windsor's marketing materials from his home in Massachusetts. Even considering Cover's newly alleged facts, Rhode Island law applies to his claims. His California and Massachusetts law claims are dismissed. Additionally, his Rhode Island consumer protection claim falls under an exemption to the statute and is dismissed. His remaining claims for breach of express warranty and implied warranty of merchantability are plausibly pleaded. Windsor's motion to dismiss is GRANTED IN PART and DENIED IN PART. Windsor's motion to strike is DENIED because it is premature with respect to some issues and unnecessary with respect to others.

BACKGROUND

The background of this case has been described in previous orders. Dkt. Nos. 37, 67. In short, Windsor manufactures WindsorONE trim board. TAC ¶ 1 [Dkt. No. 68]. Trim boards are a finger jointed product, meaning that each board is made of several shorter boards that are joined together using finger joints and adhesive. Id. ¶ 28. Cover bought and installed WindsorONE trim board on the exterior of his home in Rhode Island. Id. ¶ 72. He alleges that Windsor made misrepresentations about its trim board in advertising and marketing materials, including statements about its wood quality and performance. Id. ¶¶ 30-38.

Cover alleges that prior to installation and purchase, he relied on the recommendations of his architect, contractor, and carpenter, all of whom were familiar with the product, including its "marketing material and warranty." Id. ¶ 66. His architect and master carpenter provided him with a compact disc ("CD") containing interactive information regarding WindsorONE products. Id. ¶¶ 67-70. He reviewed the CD from his home in Massachusetts. Id. ¶ 66. "The marketing material [on the CD] is what led the architect and carpenter to recommend the product to [Cover] for his use and purchase, and plaintiff relied upon those materials to make his purchase." Id. ¶ 68. He contends that contrary to Windsor's representations, the trim board is made with "low performance" pine, the adhesive is non-waterproof, and the product began to rot "well before its represented useful or warranted life." Id. ¶¶ 40, 42, 47. These defects caused "premature decay, rotting, splitting, warping, and discoloration damage" to the trim board installed on his home. Id. ¶ 49.

The TAC alleges five causes of action: (1) violation of Rhode Island's Deceptive Trade Practices Act, or in the alternative, violation of the Massachusetts Consumer Protection Act; (2) breach of express warranty; (3) breach of implied warranty of merchantability; (4) negligence (asserted under both Rhode Island and California law); and (5) declaratory relief. Cover seeks to represent a nationwide class either defined as "All persons and entities in the United States that own or owned homes, apartments, office buildings or other structures in which Trim Board is or was installed," or a more limited class encompassing "All persons and entities in Rhode Island or Massachusetts who own or owned homes, apartments, office buildings or other structures in which Trim Board is or was installed." Id. ¶¶ 14, 17.

Windsor filed a motion to dismiss all but the declaratory relief claim. Dkt. No. 69. [Mot.]. It also filed a motion to strike references to California law, injunctive relief, and Cover's nationwide and Massachusetts class allegations. Dkt. No. 70. I heard argument on May 18, 2016.

LEGAL STANDARD

I. MOTION TO DISMISS

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). A claim is facially plausible when it "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. In considering whether the complaint is sufficient to state a claim, the court accepts as true all factual allegations contained in the complaint. Id. However, the court need not accept as true "allegations that contradict matters properly subject to judicial notice." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks omitted). "Nor is the court required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Id. "[I]t is within [the court's] wheelhouse to reject, as implausible, allegations that are too speculative to warrant further factual development." Dahlia v. Rodriguez, 735 F.3d 1060, 1076 (9th Cir. 2013).

II. HEIGHTENED PLEADING STANDARD FOR FRAUD OR MISTAKE

Claims sounding in fraud or mistake are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b), which requires that such claims "state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). To satisfy this standard, a plaintiff must identify "the time, place, and content of [the] alleged misrepresentation [s]," as well as the "circumstances indicating falseness" or "manner in which the representations at issue were false and misleading." In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547-48 (9th Cir. 1994) (internal quotation marks and modifications omitted). The allegations "must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).

III. MOTION TO STRIKE

Federal Rule of Civil Procedure 12(f) provides that "[t] he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "Motions to strike are regarded with disfavor because they are often used as delaying tactics and because of the limited importance of pleadings in federal practice. The possibility that issues will be unnecessarily complicated or that superfluous pleadings will cause the trier of fact to draw unwarranted inferences at trial is the type of prejudice that is sufficient to support the granting of a motion to strike." Ayat v. Societe Air France, No. 06-cv-01574, 2007 WL 1840923, at * 1 (N.D. Cal. June 27, 2007) (citations omitted).

DISCUSSION

I. MOTION TO DISMISS

A. Massachusetts and California Law Claims

In response to Windsor's third motion to dismiss, I conducted an extensive choice of law analysis, determined that Rhode Island law applied to Cover's claims, dismissed Cover's consumer protection claims based on California law and provided him with leave to amend to add parallel claims based on Rhode Island law. Dkt. No. 67 at 22 (specifying that Cover may amend to add any "Rhode Island-specific claims, such as statutory consumer protection claims"). Remarkably, the TAC contains a Massachusetts Consumer Protection Act ("CPA") claim. TAC ¶¶ 97-108.

There are two reasons to dismiss this claim. First, pursuant to Rule 15(a), a plaintiff may amend its complaint as matter of course only within certain circumstances, none of which is applicable to this case. Otherwise, plaintiff must seek leave of the court or the opposing party's written consent. "Only an amended complaint that is properly filed pursuant to the requirements of Rule 15 requirements can supersede the original." Taa v. Chase Home Finance, LLC, No. 5:11-cv-00554-EJD, 2012 WL 507430 at *1 (N.D. Cal., Feb. 15, 2012). An amended complaint that has been filed without leave of court or consent of the defendants is without legal effect.

Federal district courts have occasionally considered new claims submitted in an amended complaint where a previous dismissal granted leave to amend without limitation. DeLeon v. Wells Fargo Bank, N.A., No. 10-CV-01390-LHK, 2010 WL 4285006, at *3 (N.D. Cal. Oct. 22, 2010) (citing cases). But in cases like this one, where "leave to amend is given to cure deficiencies in certain specified claims, courts have agreed that new claims alleged for the first time in the amended pleading should be dismissed or stricken." Id. Cover's Massachusetts CPA claim exceeds the scope of allowable amendment under my previous order. Because Cover failed to secure Windsor's consent or seek leave of court to amend his pleadings, Windsor's motion to dismiss this claim is GRANTED.

Second, even if I considered Cover's new allegations they do not change the result of the choice of law analysis that Rhode Island law applies. Although Cover had alleged in his previous complaint that he was a resident of Rhode Island, he now asserts that he is a Massachusetts resident and that the Rhode Island house at issue is simply a vacation home. TAC ¶ 6. Cover also alleges that he "received and reviewed recommendations from his architect, contractor, and carpenter and selected the faulty Trim Board from his home in Massachusetts." Id. ¶ 66. In addition, the TAC specifies that the architectural firm Cover employed is headquartered in Massachusetts. Id. ¶ 34. The TAC does not indicate the location from which the materials were originally disseminated or communicated. Beyond a tangential reference that the architectural firm he employed is headquartered in Massachusetts, the operative complaint contains no allegation that Windsor distributed or marketed its materials in Massachusetts.

As I explained in my previous order, a choice of law analysis involves a three-part "government interest" test. McCann v. Foster Wheeler LLC, 48 Cal.4th 68, 87-88 (2010) (internal citations and quotation marks omitted). First, the court determines whether there are material differences between the relevant law of each of the potentially affected jurisdictions. Id. Second, if there is a difference, the court examines the interests of each jurisdiction in the application of its own law. Id. Third, the court "evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state." Id. Concerning California's choice of law rules, the Ninth Circuit has said that "with respect to regulating or affecting conduct within its borders, the place of the wrong has the predominant interest." Mazza v. Am. Honda Motor Co., 666 F.3d 581, 593 (9th Cir. 2012). California considers the "place of the wrong" to be the state where the last event necessary to liability occurred. Id.

I previously analyzed the material differences between California and Rhode Island law relevant to Cover's claims, including differences in privity requirements, statutes of limitation, and available damages. Dkt. No. 67. I examined each state's interest in applying its own laws and determined that the application of Rhode Island law was appropriate. I noted that pursuant to Mazza, the last events necessary for triggering liability, in this case "the communication of the marketing materials, the purchase of the products, and product deterioration," all occurred in Rhode Island. Id. at 12.

Significantly, the newly pleaded allegations do not alter that the products were purchased in Rhode Island and installed on a Rhode Island home. The underlying injury, the deterioration of the trim board, occurred in Rhode Island. Even if the communication of the marketing materials occurred in Massachusetts, which is unclear, the last event(s) necessary to liability occurred in Rhode Island, and its law applies.1

B. The Rhode Island Deceptive Trade Practices Act ("DTPA") Claim

Windsor argues that Cover fails to state a claim under DTPA because it falls under an exemption to the DTPA pursuant to Rhode Island General Law section 6-13.1-4. Mot. at 6-7. This section provides that "[n]othing in this chapter shall apply to actions or transactions permitted under laws administered by the department of business regulation or other regulatory body or officer acting under statutory authority of this state or the United States." 6 R.I. Gen. Laws Ann. § 6-13.1-4. The Supreme Court of Rhode Island interpreted this section to mean that activities which are "subject to monitoring by state and federal regulatory bodies or officers" are exempted from liability under the DTPA. Kelley v. Cowesett Hills Associates, 768 A.2d 425, 432 (R.I. 2001).

Windsor relies on Kennedy v. Acura, No. 01-cv-4063, 2002 WL 31331373 (R.I. Super. Aug. 28, 2002) to argue that it is not liable under the DTPA because Cover is asserting a products liability claim that is governed by the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (the "Warranty Act"). Mot. at 7. In opposition, Cover argues that his DTPA claim is not exempt because Kennedy applies only to "consumer warranty claims" and that his claims are based on marketing statements, not warranties. Oppo. at 6 [Dkt. No. 77].

Although Cover is correct that Kennedy applies to consumer warranty claims, and not to the potentially broader category of "products defects claims" as Windsor asserts, the distinction he attempts to draw between his own case and Kennedy is logically inconsistent and unconvincing. Kennedy holds that "consumer product warranty claims" are governed by the Federal Trade Commission under the Warranty Act and are thereby exempt from the DTPA. 2002 WL 31331373, at *3. Cover argues that his claim is not exempted by the Warranty Act because his case does not concern the warranty offered by defendants, but rather Windsor's marketing statements. Oppo. at 7. This contradicts his allegations. The TAC alleges that Windsor's "express affirmations, statements, assertions, and representations . . . constitute express warranties." TAC ¶ 111. His opposition brief also explains that the "advertisements and descriptions found in [Windsor's] marketing and sales literature" are "express warranties." Oppo. at 15. A finding that the marketing statements do not serve as warranties in this case would undermine a significant portion of his argument.

Accordingly, Cover's claim falls under an exemption to the DTPA. Windsor's motion to dismiss this claim is GRANTED.

C. Implied Warranty Claim

Windsor renews its argument that its limited express warranty bars Cover's claim for breach of implied warranty. Mot. at 13.2 Windsor cites to Star-Shadow Productions, Inc. v. Super 8 Sync Sound System, 730 A.2d 1081, 1084 (R.I. 1999) for the proposition that "a general statement that no warranties exist beyond those contained in the document is sufficient." However, the mere existence of such a statement is not enough. Rhode Island General Law section 6A-2-316(3) provides in relevant part that "to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and, in case of a writing, must be conspicuous." R.I. Gen. Laws Ann. § 6A-2-316 (emphasis added). The comment on this provision explains that "this section is designed principally to deal with those frequent clauses in sales contracts which seek to exclude `all warranties, express or implied.' It seeks to protect a buyer from unexpected and unbargained language of disclaimer by denying effect to such language when inconsistent with language of express warranty and permitting the exclusion of implied warranties only by conspicuous language or other circumstances which protect the buyer from surprise." Id.

Windsor attempts to address the issue of conspicuousness of the warranty language by arguing that it is inconsistent for Cover to say that the limited warranty was inconspicuous while also alleging that his architect, contractor, and carpenter "were all familiar with trim board, including its marketing material and warranty." Mot. at 13 (citing TAC ¶ 66). Windsor's limited warranty language appears at the bottom of a two-page document entitled "Recommended Handling, Storage, & Installation Practices" and within the "Warranty" section of Windsor's website. RJN, Exh. 1.3 The limited warranty language in the recommended practices document is located at the very bottom of the last page, in materially indistinguishable font from the rest of the document. A link to the warranty also appears on the documents contained within the CD Cover reviewed. RJN, Exh. 3.

Windsor argues that because the marketing CD clearly linked to the warranty on every page, Cover must have been familiar with the limited warranty language. But a review of the materials on the CD does not compel that conclusion. The CD, which as presented to the court contains a collection of hundreds of files with no instructions or immediately apparent method to easily navigate the information, reveals at least two different potential user interfaces. One appears to display a "Warranty" link on the main navigation bar and the other has a "Warranty" link at the bottom of the page. On the pages where the "Warranty" link is on the bottom of the page, a user can easily navigate the website, using the navigation bar located on the top of the page without necessarily seeing or clicking on the bottom links. Without further evidence and testimony, I cannot conclude that the warranty was so obviously linked to every page of the CD that it would have been impossible for Cover to be familiar with the marketing statements without being knowledgeable about the limitations of Windsor's warranty.4

Windsor's motion to dismiss this claim is DENIED.

D. Express Warranty Claim

Windsor also renews its argument that under Rhode Island law its limited express warranty serves to disclaim any and all other possible express warranties and that Cover's claim for breach of warranty based on the marketing statements is thereby barred. Mot. at 11-13.

Pursuant to Rhode Island General Law section 6A-2-313(1)(b), an express warranty is created when "[a]ny description of the goods [is] made part of the basis of the bargain." R.I. Gen. Laws Ann. § 6A-2-313. Cover has alleged the existence of multiple written statements describing Windsor's products as "defect free," "free of lumber defects," "more resistant to cupping, twisting, [] warping," "suitable for all interior and exterior applications," "waterproof," and "exceed[ing] the standards" set by the American Society of the International Association for Testing and Materials. TAC ¶¶ 30-38, 70, 112. He asserts that Windsor's marketing statements and advertisements were plausibly "part of the basis of the bargain" because the "marketing material is what led the architect and carpenter to recommend the product to [him] for his use and purchase, and [he] relied upon those materials to make his purchase." Id. ¶ 68.

Windsor argues its Warranty Disclaimer, which provides that "[t]here are no warranties, expressed or implied, including merchantability, beyond the above Limited Warranty," RJN, Exh. 1, disclaims the existence of any other warranties.

Windsor relies primarily on Fidrych v. Inskip Motors, Inc., No. C.A. 73-1284, 1982 WL 604065, at **1-2 (R.I. Super. Jan. 6, 1982) to dispute Cover's characterization of its marketing statements as express warranties because they were not listed under the "Warranty section" of its marketing materials, but rather under the "Features and Benefits" section "for the limited purpose of marketing." Mot. at 12. But Fidrych does not involve an analogous situation.

In Fidrych, the court considered whether the inclusion of incorrect mileage on a car's invoice served as the basis for a breach of express warranty claim. The invoice provided: "Warranty 60 days 50-50 mechanical in our shop or 2,000 miles whichever comes first. Indicated Mileage: 44,342." Fidrych, 1982 WL 604065, at *2. In fact the correct mileage was 104,628 and was indicated on a sticker on the car. Id. The court found that the indicated mileage was not an express warranty because it was only inserted for the limited purpose of "guid[ing] the parties should any mechanical problems arise" after purchase of the car. Id. at *1.

Windsor attempts to apply Fidrych's reasoning by arguing that its marketing statements were for the limited purpose of marketing and do not constitute an express warranty. Mot. at 11-12. Fidrych was decided after a trial on the merits during which there was conflicting testimony whether the car salesman ever represented to the plaintiff that the car only had 44,342 miles or whether the invoice "served no other purpose" than to guide the parties "should any mechanical problems arise either during the 60 days after purchase or before the plaintiff drove the car 2,000 miles." 1982 WL 604065, at *1. I cannot draw a similar conclusion at the pleading stage.

Cover has plausibly alleged that Windsor's statements were accurate representations of the goods and became part of the basis of the bargain. Under Rhode Island law, it is not necessary that a seller used formal words such as "warranty" or guarantee" to create an express warranty. R.I. Gen. Laws Ann. § 6A-2-313. Express warranties can be created by: (1) "Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise;" or (2) "Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description." Despite Windsor's assertions to the contrary, statements do not have to be clearly labeled or categorized under a "warranty" section, or even be intended to be a warranty, to be one. See Ingraham v. Union R. Co., 19 R.I. 356, 22 A. 875, 876 (1896) ("Nor is it true, as sometimes stated, that the representation, in order to constitute a warranty, must have been intended by the vendor, as well as understood by the vendee, as a warranty; for if the representation as to the character or quality of the article to be sold be positive, and not mere a matter of opinion, and the vendee understands it and relies upon it as a warranty, the vendor is bound thereby, no matter whether he intended it to be a warranty or not.").

Windsor also reasserts its previous argument that because Cover alleges that he and his agents were familiar with and relied upon the marketing material and warranty, his argument that he was not aware of the terms of the limited warranty is implausible. But under Rhode Island law, limitation language is not enforceable if it is inconsistent with the other language. R.I. Gen. Laws Ann. § 6A-2-316(1) ("Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other. . . . [N]egation or limitation is inoperative to the extent that such construction is unreasonable.") (emphasis added). The Warranty Disclaimer on Windsor's website provides that, "In Windsor Mill's opinion, its statements about WindsorONE products on this website and in printed literature are believed to be accurate, but do not constitute separate warranties." RJN, Exh. 3. Neither party has cited any relevant case law directly addressing the "reasonableness" inquiry under this section of Rhode Island law. As I explained in my previous order, it is not clear at this time whether it is reasonable for Windsor to affirm the accuracy of its marketing statements while, at the same time, limiting its liability. Considering that this case is still at a motion to dismiss stage and full discovery on what Cover should reasonably have known has not been conducted, it would be inappropriate to dismiss this claim without additional information.5

Windsor's motion to dismiss the express warranty claim is DENIED.

E. Punitive Damages

Windsor argues Cover's request for punitive damages should be dismissed because he has not sufficiently pleaded "criminality." Under Rhode Island law, a plaintiff must plead that a defendant's fault "amounts to criminality, which for the good of society and warning to the individual, ought to be punished." Johnson v. Johnson, 654 A.2d 1212, 1217 (R.I. 1995) (internal quotation marks and modifications omitted). "The standard in Rhode Island for imposing punitive damages is rigorous and will be satisfied only in instances wherein a defendant's conduct requires deterrence and punishment over and above that provided in an award of compensatory damages." Id. Cover's allegations do not meet this standard.

The TAC contains allegations that Windsor acted with "malice, deliberately, willfully, knowingly, wantonly and with flagrant disregard of the safety of persons who might be harmed by their product." TAC ¶ 55. But boilerplate usage of these terms is insufficient to justify a request for punitive damages. As a threshold matter, under Rhode Island law, punitive damages are not available for breaches of contract claims even if the violation is willful. See D&E Realty, Inc. v. Weinman, No. C.A. 80-969, 1985 WL 663148, at *3 (R.I. Super. Feb. 15, 1985). Additionally, "[i]n order for a plaintiff to recover punitive damages it would appear that the actor must have engaged in the conduct for the purpose of inflicting actual harm to the victim." Manocchia v. Narragansett Television, No. C.A. NO. PC/92-7046, 1996 WL 937020, at *3 (R.I. Super. Dec. 12, 1996). Beyond Cover's rote use of terms like "malice," "wantonly," and "with flagrant disregard," none of Cover's allegations supports a reasonable inference that Windsor acted with the intent to harm.

Windsor's motion to dismiss Cover's request punitive damages is GRANTED.

II. MOTION TO STRIKE

A. California Law and Injunctive Relief Allegations

Windsor seeks to strike allegations in the TAC relating to California law and injunctive relief as these claims were dismissed in my previous order. The relevant allegations are as follows:

TAC ¶¶ 21(e), 21(f), 21(g), 21(n) 92, D (under prayer for relief).

These allegations relate to causes of action or forms of relief that have clearly been dismissed. Cover is not entitled to proceed on them. There is no point in also striking the isolated and scattered references to them throughout the TAC. Windsor's motion to strike is DENIED. Nothing in this Order should be read to support the viability of those claims.

B. Nationwide and Massachusetts Classes

Windsor seeks to strike allegations relating to Cover's purported nationwide or alternative Massachusetts classes.6 It argues that application of Rhode Island law to residents of all fifty states would be arbitrary and in violation of the Due Process Clause. Windsor also takes issue with the manner in which Cover's proposed classes are currently defined.

Windsor raises some serious issues regarding the feasibility of Cover's proposed classes. However, I will not strike Cover's class allegations or descriptions at this stage. As I stated in my previous order, if other adequate plaintiffs are added to this lawsuit, the application of other states' laws may be appropriate. Windsor's arguments are better addressed at class certification.

Windsor's motion to strike the class allegations and descriptions is DENIED.

CONCLUSION

Windsor's motion to strike is DENIED. Windsor's motion to dismiss is GRANTED IN PART and DENIED IN PART as follows:

IT IS SO ORDERED.