A recent post noted that several recent decisions have undermined the privity requirement that has been applied to breach of implied warranty claims under the U.C.C. in California. A recent Central District of California opinion continues that trend.
In Michael v. Honest Co., No. 15-cv-07059 (C.D. Cal. Dec. 6, 2016), Judge John A. Kronstadt declined to dismiss both express and implied warranty claims under California law. Plaintiffs brought their implied warranty claims under California’s U.C.C. provision, rather than under the Song Beverly Consumer Warranty Act (which does not have a privity requirement).
The court held first that “Plaintiffs’ express warranty claim is sufficiently alleged because vertical privity is not required for such claims.” The court then recognized that while privity is required under the California U.C.C. provision for implied warranty claims, there is a recognized exception for when the plaintiff is a third-party beneficiary of the contract between the manufacturer and retailer. Because plaintiffs had bought a consumer product (sunscreen), the court had no trouble holding plaintiffs were third-party beneficiaries and that the privity requirement did not apply.… Read more
California allows for two different types of implied warranty claims. The first arises under the Uniform Commercial Code, and the second arises under the Song Beverly Consumer Warranty Act. Claims under the two statutes differ in a few ways, but perhaps most notably is the privity requirement that exists for the U.C.C. claim, but not for the Song Beverly Claim. Several recent opinions have undermined the U.C.C.’s privity requirement in the context of automotive defect class actions.
In Bryde v. General Motors, the plaintiffs alleged they bought vehicles with defective airbag systems. 2016 WL 6804584, at *15 (N.D. Cal. Nov. 17, 2016). Plaintiffs brought several claims, including a California U.C.C. implied warranty claim. GM sought to dismiss the U.C.C. claim on the grounds that a claim under California Commercial Code section 2314 requires vertical privity. See Sec. 2314 (“a plaintiff asserting breach of warranty claims must stand in vertical contractual privity with the defendant”). Rather than contesting the privity requirement, plaintiffs argued that an exception applies where plaintiff is a third-party beneficiary to a contract that gives rise to the implied warranty.
Judge William H. Orrick agreed. He noted first that “in a previous decision, I declined to recognize the third-party beneficiary exception under California law,” interpreting prior cases as foreclosing the exception. … Read more