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State Farm Fire and Casualty Co. v. Amazon.Com Inc.

United States District Court, D. Arizona

March 29, 2018

State Farm Fire and Casualty Company, Plaintiff,
v. Incorporated, et al., Defendants.


          James A. Teilbrorg Senior United States District Judge

         Pending before the Court is Defendant's Motion to Dismiss Plaintiff's Fourth Amended Complaint (“Motion to Dismiss”), (Doc. 74).[1] Plaintiff has responded (“Response”), (Doc. 76), and Defendant has replied (“Reply”), (Doc. 77).

         I. Background

         The Court assumes that the facts alleged in the Fourth Amended Complaint (“FAC”), (Doc. 72), are true for purposes of deciding the pending Motion to Dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). In November of 2015, a family friend of Hussein Zeitoun purchased two hoverboards from Super Engine, Easycredit Trade Hongkong Co., limited dba Super Engine, and, Inc. (FAC ¶ 9). After several months, this purchaser then sold the hoverboards to the Zeitoun family. (Id.) On June 23, 2016, while the hoverboards' batteries were charging, they suddenly and unexpectedly exploded. (Id.) This explosion started a fire in the Zeitoun's home and caused severe damage. (Id.) State Farm Fire and Casualty Company (“Plaintiff”) paid for the Zeitouns' investigation and damages, (id.), which amounted to $433, 710.37. (Id. ¶ 1). Accordingly, Plaintiff, as the subrogee of the Zeitouns, brings this claim. (Id.) Plaintiff alleges that Defendants knew or should have known that the batteries were defective[2] and that they continued to use these defective batteries up to and including the sale and delivery date in November 2015. (Id. ¶ 10). Additionally, Plaintiff alleges that Defendants represented that Samsung manufactured the batteries used in the hoverboards and that “these representations were false, misleading, deceptive, untrue, reckless and outrageous.” (Id.)

         On December 22, 2017, Plaintiff filed its FAC alleging seven counts of liability against Defendants: Strict Liability, Negligence, Breach of Express Warranties, Breach of Implied Warranties, Negligent Misrepresentation, Consumer Fraud, and Aiding and Abetting. (FAC at 7-11).

         II. Motion to Dismiss

         Defendant, Inc. (“Defendant”) now moves to dismiss three of these seven counts from the FAC for failure to state a claim under Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Doc. 74 at 3-6). Defendant argues that subsequent purchasers may not bring a claim under the Arizona Consumer Fraud Act (“CFA”), that Defendant owed no duty that could support a negligent misrepresentation claim, and that Plaintiff has not sufficiently pleaded aiding and abetting. (Id.)

         A. Legal Standard

         The Court may grant a motion to dismiss a complaint for failure to state a claim if it either lacks a cognizable legal theory or alleges insufficient facts under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint that satisfies Rule 8(a)(2)'s requirement of “a short and plain statement of the claim showing that the pleader is entitled to relief, ” is sufficient to survive a Rule 12(b)(6) motion. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Although Rule 8 “does not require ‘detailed factual allegations, '” it does require “more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). In other words, the complaint must plead sufficient facts to “state a claim for relief that is plausible on its face.” Id.; see also Twombly, 550 U.S. at 555 n.3 (stating that Rule 8 “requires a ‘showing, ' rather than a blanket assertion, of entitlement to relief.”). A complaint shows facial plausibility when it pleads factual content that allows the court to draw reasonable inferences as to the defendant's liability. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). But, when “a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.”'” Iqbal, 556 U.S at 678 (quoting Twombly, 550 U.S. at 557).

         Finally, the Court must accept as true all well-pleaded factual allegations in the Complaint. Id. at 679. However, pleadings that offer no more than legal conclusions are not entitled to the same assumption of truth. Id.

         B. Consideration of the Exhibits Attached to the Response

         The Court must first determine whether it can consider the Response's exhibits. (Response at Exs. A, B). Plaintiff relies on Exhibit A, an Amazon receipt for the purchase of two hoverboards, to illustrate that Defendant made false representation about the brand of battery used in the hoverboards. (Response at 7). Plaintiff relies on Exhibit B, an article about Amazon refunding hoverboard owners, to demonstrate that “[t]here are numerous fires throughout the country involving the same product, numerous lawsuits similar to this one throughout the country in Federal Courts, and this is established by the mandatory disclosure of both parties in this case.” (Response at 8).

         On a motion to dismiss for failure to state a claim, the scope of review is generally “limited to the contents of the complaint.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir.2006) (citing Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1141 n.5 (9th Cir. 2003)). The Court may, however, consider evidence upon which the Complaint “necessarily relies.” Id. (citing Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994)). A complaint “necessarily relies” on evidence if: “(1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the [Rule] 12(b)(6) motion.” Id.

         Having reviewed the FAC and the Exhibits, the Court finds that the FAC does not “necessarily rely” on the Exhibits used. The FAC does not refer to Exhibit B. Furthermore, this news story is not central to Plaintiff's claim both because it does not support the proposition that Defendant had prior knowledge of any defect at the time of sale and because the story actually postdates the first hoverboard sale in this case. (Doc. 77 at Ex. B). The FAC also does not reference Exhibit A. The FAC generally states that Defendants “marketed and sold [the hoverboards] . . . as including and containing name brand, reliable, safe, tested, trusted, and well regarded batteries and components, including, but not limited to Samsung batteries, however these representations were false.” (FAC ¶ 12). But, in order to “necessarily rely” on evidence, the complaint must specifically reference the existence of documents as part of the factual basis for the complaint. See Branch, 14 F.3d at 453; Townsend v. ...

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