[00:00:05] Speaker 03: Good morning, your honors. [00:00:06] Speaker 03: My name is Alex Strauss on behalf of the appellant. [00:00:10] Speaker 03: It's an honor to be before you. [00:00:12] Speaker 03: I have two main arguments that I'd like to make today. [00:00:16] Speaker 03: Um, with the, you know, in the context that this case was dismissed at the pleading stage, uh, and an appellant submit, uh, that there's ample evidence to plausibly suggest that one, uh, the defendant, the defect that issue creates a safety hazard and that to Honda knew or should have known that the defect [00:00:35] Speaker 03: was evident prior to plaintiff's purchases. [00:00:38] Speaker 03: So those are the two points I'd like to make today. [00:00:41] Speaker 03: First, start with the defect, which is important to understand. [00:00:44] Speaker 03: The AC system suffers from one single underlying defect, which is that it's not strong or durable enough to withstand the internal pressures or external forces encountered during normal operation. [00:00:57] Speaker 03: And that defect manifests itself in a number of ways that are inherently unsafe, including defogging, unable to defog the windshield, and then also in spontaneous in-operation stalling of the vehicle. [00:01:15] Speaker 03: To quote from the district court's order, which is at 1ER7, district court quotes from the complaint, quote, should the class vehicles begin to hemorrhage refrigerant during vehicle operation, [00:01:27] Speaker 03: the compressor might seize and the vehicle may stall, significantly increasing the risk of accident. [00:01:33] Speaker 03: So the district court highlighted that allegation and defendant has never denied its possibility. [00:01:39] Speaker 02: I thought your focus was on the defogging, not on stalling. [00:01:42] Speaker 03: So our allegations are both. [00:01:45] Speaker 03: We did put an emphasis, of course, on the defogging. [00:01:48] Speaker 03: That was the most at issue in the lower court, and then, of course, in the district court's opinion. [00:01:55] Speaker 03: And so that has been the focus of our briefing. [00:01:57] Speaker 02: But in the briefs to us, did you talk about stalling? [00:01:59] Speaker 02: I don't remember that. [00:02:01] Speaker 03: Yes. [00:02:01] Speaker 03: So it was not in the briefing to this court. [00:02:05] Speaker 03: It is part of the record. [00:02:06] Speaker 03: As I said, it's in the complaint. [00:02:08] Speaker 03: that section that I quoted was in the district court's opinion. [00:02:12] Speaker 02: Okay, well it seems like you may have forfeited it if you didn't raise it in your briefs to us. [00:02:16] Speaker 03: So there, I appreciate that argument or that position that you have. [00:02:21] Speaker 03: There are cases in California and the Ninth Circuit speaking to waiver or forfeiture of arguments or they're mostly forfeiture of issues and it has been held [00:02:35] Speaker 03: uh... in every district in fact in the united states apart from the first district that uh... a motion to dismiss a 12b6 motion is uh... concerning the sufficiency of the pleadings not sufficiency of any response to the motion and therefore uh... you do not waive you cannot waive arguments you cannot waive issues pardon me and there's no case on point that i know of in the ninth circuit that talks specifically about arguments that have been uh... part of the record so there is a case that i'd like to [00:03:05] Speaker 03: draw the court's attention to, which is Ortiz versus Alvarez, which is in the Eastern District, specifically speaks to a situation where a plaintiff does not respond at all to a motion to dismiss. [00:03:21] Speaker 02: But I'm talking about our own rules. [00:03:23] Speaker 02: I mean, we have a rule that you have to raise issues in your opening brief, and otherwise they're forfeited. [00:03:26] Speaker 02: So why should we consider today something about stalling when that wasn't the theory you put in your opening brief? [00:03:33] Speaker 03: Well, let me just let me say that I'm perfectly prepared and will be speaking about some of the issues that we raised. [00:03:39] Speaker 01: I do think that that that there is not precedent to say that a particular argument factual argument is not even your strongest argument, because the allegation is that if the air conditioner begins to hemorrhage refrigerant during vehicle operation, [00:03:56] Speaker 01: the compressor might seize and the vehicle may stall. [00:04:00] Speaker 01: So that's kind of, they were speculative. [00:04:02] Speaker 01: You actually have tangible defogging and heat claims that you've alleged. [00:04:10] Speaker 01: So why don't you talk about those? [00:04:12] Speaker 03: I appreciate that. [00:04:12] Speaker 03: I will move on to defogging and we can leave the stalling for later, for another time. [00:04:22] Speaker 03: First and foremost, there is a, you know, we are at the motion dismissed stage. [00:04:27] Speaker 03: We certainly have alleged what we consider to be significant safety hazards. [00:04:31] Speaker 03: So let's speak about the defogging, for instance. [00:04:34] Speaker 03: We have evidence in the record or [00:04:38] Speaker 03: complaints in the record, which speak to a 10-minute lapse to defog the air conditioner once the air conditioner stalls, right? [00:04:50] Speaker 03: And so I think it goes specifically to the issue of the safety hazard [00:04:56] Speaker 03: If any number of situations driving 70 miles an hour on a freeway and your air conditioner conks out, obviously you don't know that until the windshield begins to fog. [00:05:09] Speaker 03: Now we have complaints in the record that it takes 10 minutes, I would submit, even if it only takes 10 seconds. [00:05:17] Speaker 03: 10 seconds of impaired visibility either while on a highway is absolutely a safety hazard. [00:05:22] Speaker 03: I would submit that even another situation [00:05:25] Speaker 03: you know, approaching the intersection, let's say you could even be stopped, your air conditioner goes off, your windshield begins to fog. [00:05:33] Speaker 02: So say we agree with you that the district court erred in thinking that this wasn't a sufficient safety problem. [00:05:39] Speaker 02: you would still have to overcome the alternative grounds for affirmance that the other side has argued. [00:05:44] Speaker 02: And one of those, I think, you've been trying to rely on the third party beneficiary exception, but I'm not sure I understand quite your theory on that. [00:05:51] Speaker 02: Could you explain what contract you think made your clients the third party beneficiary and what your theory is on that? [00:05:59] Speaker 03: So you're talking about the privity issue, is that right? [00:06:03] Speaker 03: Sure. [00:06:04] Speaker 03: I would just start by saying that the fact that there is a significant safety defect here triggers the implied warranty, right? [00:06:15] Speaker 03: And so that's what we're really talking about. [00:06:17] Speaker 03: So there's a number of states here that even the, respectfully, the defendant admits that there's no privity issue. [00:06:25] Speaker 01: So Indiana... As to the ones where there is a privity issue, [00:06:29] Speaker 01: you argue and and you're the members of the class purchase from dealerships and not the manufacturer and but they're arguing that they're third-party beneficiaries of a contract between the manufacturer and the dealership what contract is that well there there is the well certainly the [00:06:51] Speaker 03: The consumer, the driver of the car is the third party beneficiary of the extended warranty and by extension the implied warranty. [00:07:00] Speaker 02: And who is the warranty contract between? [00:07:04] Speaker 03: I would submit that the consumer is the intended third party beneficiary of the extended warranty. [00:07:13] Speaker 03: There is no evidence in record or logic would not submit that at any point. [00:07:18] Speaker 02: Who are the parties to the contract of the extended warranty? [00:07:23] Speaker 03: The extended warranty is between the manufacturer and the dealership. [00:07:32] Speaker 03: But the consumer is the third-party beneficiary of that. [00:07:35] Speaker 03: There's no indication that the manufacturer ever thought that the dealership was going to be benefiting from it. [00:07:44] Speaker 02: Do we have copies of the contract that you're using to say this? [00:07:49] Speaker 03: Do we have copies of the extended warranty? [00:07:53] Speaker 03: Of the, yes we did. [00:08:04] Speaker 03: Pardon me for. [00:08:15] Speaker 03: I believe that the warranty is one of the, yes it is. [00:08:27] Speaker 03: Warranty is Exhibit 7. [00:08:29] Speaker 03: It's at ER 430, I believe. [00:08:56] Speaker 03: And so there are a number of states, including California, but also Florida, Illinois, North Carolina, and Washington, that have recognized the third-party beneficiary exception to the poverty requirement, specific to, in some cases, automotive. [00:09:18] Speaker 01: I have another different question. [00:09:20] Speaker 01: You were granted lead to amend your complaint, but you chose not to amend it? [00:09:27] Speaker 03: Correct. [00:09:28] Speaker 01: You chose to stand on it. [00:09:30] Speaker 03: Yes, we feel like we have sufficient allegations here to more than surpass the standard at the motion to dismiss stage about both the safety issue and also presale knowledge, which are the [00:09:47] Speaker 03: Uh, two primary issues that I was hoping to speak to, but of course, um, open to additional questions. [00:09:53] Speaker 02: I'm looking at this page of the ER that you're citing and I'm having trouble understanding that it's a contract at all. [00:09:57] Speaker 02: It looks like a manual or something. [00:10:00] Speaker 02: I'm not quite sure what this is, but. [00:10:02] Speaker 03: It may be that particular warranties between our particular clients in this case may not be in the record. [00:10:11] Speaker 03: I'd have to look for that. [00:10:12] Speaker 03: I apologize. [00:10:13] Speaker 03: We could certainly submit. [00:10:14] Speaker 02: But if you're relying on the third party beneficiary exception by saying that this contract made someone a third party beneficiary, how could we hold in your favor without being able to read it? [00:10:24] Speaker 03: Well, we certainly would have to overturn the district court's opinion on the number of states that don't even require a privity between the manufacturer and the consumer. [00:10:36] Speaker 03: So that would be Indiana, Michigan, Missouri, New Jersey, Pennsylvania, Texas, and Virginia. [00:10:55] Speaker 03: And I'm pausing here just to in case there's more that you want to ask me about the privity issue. [00:11:00] Speaker 03: Um, it sounds like, uh, perhaps you've heard enough. [00:11:04] Speaker 02: I mean, I guess I'm worried that in those, you just brought the claim too late, that there was, that there was no breach during the implied warranty period. [00:11:15] Speaker 03: OK, but when there is a safety defect, then there is case law to support that they're extended. [00:11:26] Speaker 02: Didn't you need the extended warranty to get this to extend? [00:11:30] Speaker 02: And I guess I'm not sure in the states where you say, in these ones where you say that privity isn't required, how you're in time. [00:11:40] Speaker 03: Well, the implied warranty of merchantability extends beyond the [00:11:45] Speaker 03: the warranty period in a situation where there is a safety defect at issue. [00:11:50] Speaker 02: Is that only if the states follow MEXIA? [00:11:53] Speaker 03: No, that's regardless of that. [00:11:57] Speaker 03: I believe that is nationwide, that if there is a safety defect, that the implied warranty, there's still a merchantability issue. [00:12:15] Speaker 02: Don't you need a breach of, don't you need there to be a defect during the warranty period? [00:12:21] Speaker 03: No, the implied warrant of, let me give you some case law on that and I apologize, I don't have it right in front of me. [00:12:29] Speaker 03: The implied warrant of merchantability extends beyond the warranty in a situation where there is a safety defect, as I mentioned. [00:12:41] Speaker 02: So Mexia says that in California about latent defects, but I'm not sure what you're relying on otherwise or whether you have case law that says the other states rely on Mexia, which has been criticized by other courts. [00:12:56] Speaker 03: Yes. [00:13:07] Speaker 03: So there is Mexia, of course. [00:13:08] Speaker 03: There's also Daniel v. Ford, which stated that absent convincing evidence that the California Supreme Court would decide the issue of Mexia differently. [00:13:17] Speaker 02: Right, but that's about California. [00:13:18] Speaker 02: So we know California has Mexia. [00:13:20] Speaker 02: What other states? [00:13:21] Speaker 02: Because you're talking about Indiana, Michigan, Missouri, New Jersey, Pennsylvania, Texas. [00:13:26] Speaker 02: Those states, why do we think they follow Mexia? [00:13:54] Speaker 03: If I could just reserve my time and just make sure that I have the proper case citations for you. [00:14:02] Speaker 01: Okay, you may do that. [00:14:03] Speaker 01: Thank you. [00:14:27] Speaker 01: You may proceed. [00:14:27] Speaker 00: Oh, thank you. [00:14:28] Speaker 00: Good morning, Your Honors. [00:14:29] Speaker 00: I am Eric Kazarian, and I represent American Honda Motor Co. [00:14:33] Speaker 00: Inc. [00:14:34] Speaker 00: Although our briefing highlights many claim-specific reasons why the order below should be affirmed, the common path to affirmance here is through the recognition that for both claims, plaintiffs have to plead an unreasonable safety defect, and the district court was correct in finding that under this court's precedent and the facts alleged in the four corners of the complaint, plaintiffs had not done that. [00:14:57] Speaker 02: So you're saying the fogging is not a safety defect? [00:15:00] Speaker 00: It's not, and for a host of reasons, Your Honor, not the least of which are plaintiff's own allegations in the complaint. [00:15:08] Speaker 01: Specifically? [00:15:09] Speaker 00: So there's two things. [00:15:11] Speaker 00: The first is, plaintiffs allege that the failure of the AC system, which, by the way, is not that it fails to function altogether, it stops blowing cold air. [00:15:19] Speaker 00: It's still blowing some air or heat. [00:15:22] Speaker 00: That's not the issue. [00:15:24] Speaker 00: The issue is, does it [00:15:25] Speaker 00: leak enough refrigerant such that it stops blowing coal there. [00:15:28] Speaker 00: That's the alleged defect. [00:15:29] Speaker 00: There's a leak, the refrigerant goes out. [00:15:32] Speaker 02: They allege it doesn't defrost the car at that point, right? [00:15:35] Speaker 00: That's the allegation. [00:15:37] Speaker 00: But there's two dispositive facts here in the complaint that are important to this court's analysis under this court's precedent. [00:15:43] Speaker 00: They allege that the failure of the AC system is a premature failure of a component in the vehicle. [00:15:50] Speaker 00: There's no allegation that it's a completely unexpected failure. [00:15:53] Speaker 00: And by that I mean, [00:15:55] Speaker 00: At some point, the hoses and other things that are supposed to not crack and carry the refrigerant are going to crack. [00:16:03] Speaker 00: So the consumers don't have an expectation that the AC will work forever in their car, just that it's saying nine separate times they allege the AC failed prematurely. [00:16:13] Speaker 00: And under this court's precedent under Williams, it says, which was an affirmation of a motion to dismiss for failure to allege [00:16:25] Speaker 00: safety defect, this court held the allegation that the failure was premature in that it happened sooner than it was otherwise expected cuts against the finding that this is an unreasonable safety defect. [00:16:38] Speaker 00: That's this court's published precedent in Williams versus Yamaha. [00:16:41] Speaker 00: And that was a case where the motors on the boats were failing, they were supposed to run a thousand hours, they failed at 500 hours, and the defect was causing all kinds of safety concerns because at the time it failed, [00:16:54] Speaker 00: people were being exposed to a risk. [00:16:56] Speaker 00: And this court held in that case, plaintiffs alleged by their own words, this was a, quote, premature failure. [00:17:03] Speaker 00: And a premature failure, by definition, is something that happens sooner than expected. [00:17:08] Speaker 00: It's not an allegation that is completely unexpected. [00:17:12] Speaker 00: So under this court's precedent and plaintiff's own allegations, nine separate times. [00:17:16] Speaker 02: So I feel like you're making a different argument about [00:17:20] Speaker 02: Talking about whether it's premature or not when it happens right after the warranty period is a different thing than saying defogging isn't a safety feature, I feel like. [00:17:28] Speaker 00: Well, no. [00:17:29] Speaker 00: Well, there's and that it's not a defogging. [00:17:32] Speaker 00: The point is that there's an element of surprise that that that is important to a finding of an unreasonable safety defect. [00:17:39] Speaker 00: So, for example, they cite a case called Hyundai versus Brand, which is a California case. [00:17:45] Speaker 00: And this is a case where somebody is driving around [00:17:47] Speaker 00: and all of a sudden the sunroof starts just opening by itself, paper starts flying around. [00:17:53] Speaker 00: You don't know when it's gonna happen. [00:17:54] Speaker 00: You don't even know it's gonna happen at all. [00:17:56] Speaker 00: There's no expectation by the consumer that a sunroof at any time during vehicle ownership will spontaneously open. [00:18:02] Speaker 00: In contrast to here, there's some expectation that at some point your AC will fail. [00:18:08] Speaker 00: The hoses will crack. [00:18:09] Speaker 00: You'll have to get them replaced. [00:18:11] Speaker 00: And if that happens, you may not be able to defog your vehicle [00:18:15] Speaker 00: You still have air, you still have hot air, you can still roll down your windows, you just have to get your AC fixed. [00:18:22] Speaker 00: And the element of surprise is what makes this an unexpected safety defect. [00:18:27] Speaker 00: Unreasonable safety defect. [00:18:28] Speaker 00: It's not the fact that a component fails. [00:18:31] Speaker 00: It's whether you're expecting that. [00:18:32] Speaker 00: And that's what this court held. [00:18:34] Speaker 02: So I thought your argument in your brief was more like, not every car, and like what the district court held, not every car has an air conditioner, so this isn't a necessary component. [00:18:42] Speaker 02: You seem like you're making a different argument now. [00:18:43] Speaker 00: So that's the second allegation. [00:18:45] Speaker 00: So I started by saying there are two factual allegations in the complaint that cut against finding of an unreasonable safety defect here. [00:18:52] Speaker 00: And so the first is the element of surprise that this was a premature failure, not an unexpected failure. [00:18:57] Speaker 00: The second is plaintiff's own admission that for years, cars have had AC systems as optional safety features. [00:19:07] Speaker 00: A car with a non-functional AC system is functionally no different than a vehicle with no AC system at all. [00:19:14] Speaker 00: There are many cars on the road here today that are perfectly road worthy, merchantable and safe despite not having any AC system at all. [00:19:23] Speaker 00: And how do people defog their windows? [00:19:25] Speaker 00: They roll down their windows. [00:19:28] Speaker 00: The point is, the plaintiffs themselves say this is not a necessary component to the safe operation of a vehicle. [00:19:34] Speaker 00: Generations of people, including most of us in this room, have driven in cars that didn't have an AC system at all. [00:19:40] Speaker 00: How is a vehicle with no AC system functionally any different than the one that doesn't have one that works? [00:19:47] Speaker 02: Do we have anything in the record that explains how people defrosted cars before air conditioners? [00:19:52] Speaker 00: I don't think Dave alleged that, but under ICBAL, in assessing plausibility under Rule 8, the court is permitted, in fact, encouraged to apply judicial experience and common sense. [00:20:09] Speaker 02: And what is the answer? [00:20:10] Speaker 02: I don't remember. [00:20:10] Speaker 02: I mean, you can't drive when you can't see, so maybe cars used to come with some feature that helped you wipe off the fog or something. [00:20:17] Speaker 02: I don't know. [00:20:18] Speaker 00: Well, this is on the inside of the vehicle window, right? [00:20:21] Speaker 00: So I think most people roll down their windows, but also the car that comes with no AC system still has heat, has the ability to blow some air, which is the same as this car here, which is it blows air. [00:20:36] Speaker 00: It just doesn't blow cold air because there's a crack. [00:20:38] Speaker 02: Their allegation is you can't see out the window. [00:20:41] Speaker 00: Correct, which is a common condition that occurs when you're driving, which is a common condition that occurs whether you have an AC system or not. [00:20:50] Speaker 00: The element of surprise here is not by the functioning existence or non-existence of an AC system. [00:20:56] Speaker 00: The element of surprise here is just not there at all. [00:20:59] Speaker 00: It's a common driving experience. [00:21:01] Speaker 00: And people deal with it, have dealt with it for years, whether they've had an AC system or not. [00:21:06] Speaker 02: But again, it's also- So say we may disagree with you on this. [00:21:08] Speaker 02: Can you talk about your alternative grounds for affirmance? [00:21:10] Speaker 00: Sure. [00:21:11] Speaker 00: The alternative grounds for affirmance for the consumer protection claims are that there's no allegation under this court's precedent, under William Wilson, sufficient to establish that American Honda knew of an unreasonable safety risk at the time and point of purchase of these individual plaintiffs. [00:21:30] Speaker 00: And that's the key here. [00:21:31] Speaker 00: It's not that you had some knowledge at some point in your life. [00:21:36] Speaker 00: Did you have it sufficient to disclose it? [00:21:38] Speaker 00: Because under this court's precedent, there's no duty to disclose a fact that you did not know. [00:21:43] Speaker 00: And in this case, there are 21 nameplanners. [00:21:48] Speaker 00: 15 of them bought cars in 2016. [00:21:51] Speaker 00: Four of them, I believe, bought cars in 2017. [00:21:54] Speaker 00: And two of them bought cars in 2018. [00:21:58] Speaker 00: The only dated allegations that allow you to juxtapose what Honda knew when against the plaintiff's purchase dates is the NHTSA complaints, which are dated. [00:22:10] Speaker 00: They didn't analyze that, but the district court did, and we did it in our briefing, we did it in our briefing here. [00:22:15] Speaker 00: And that shows that, yes, there are 57 complaints, but if you really look at the dates, 54 of them post-state. [00:22:24] Speaker 00: the hundreds of thousands of vehicles that are on the road, but certainly post-state these plaintiffs purchases. [00:22:31] Speaker 00: And the allegation is Honda had a duty to disclose based on these complaints that the air conditioning system could be defective and could fail. [00:22:44] Speaker 00: And the basis of knowledge is facts that occurred long after their purchases. [00:22:48] Speaker 00: So it just doesn't work there. [00:22:51] Speaker 00: And that allegation alone, which is the only dated allegation, everything else is an undated, kind of generic allegations about, oh, you did pre-testing and all that stuff, which doesn't, which this court and other courts have repeatedly affirmed is not enough to allege knowledge, do not give a basis for a duty to disclose. [00:23:09] Speaker 00: So the court was absolutely correct in concluding there's no duty to disclose there. [00:23:15] Speaker 00: On the implied warranty claim, [00:23:18] Speaker 00: I don't want to touch the privity issue because I think there's a cleaner path to affirming that. [00:23:21] Speaker 00: And that cleaner path is the alleged implied warranty breach each occurred long after the warranty had lapsed. [00:23:30] Speaker 00: The express warranty here expressly limits the duration of any implied warranty to the term of the express warranty. [00:23:37] Speaker 00: And the court found that there was no breach of express warranty during the express warranty period. [00:23:43] Speaker 00: Plaintiffs chose not to appeal that finding. [00:23:47] Speaker 00: They let that one go. [00:23:48] Speaker 00: And what they're challenging us on here is that the implied warranty was breached after the warranties expired. [00:23:57] Speaker 00: Well, there was no implied warranty after the warranties expired because by the terms of the express warranty, they're coexistent. [00:24:03] Speaker 00: Express warranty and the implied warranty, from a temporal perspective, expire at the same time. [00:24:08] Speaker 02: But in California, that's not true under MEXIA, right? [00:24:11] Speaker 00: Yes, but only if you find that it's a latent defect. [00:24:13] Speaker 00: And let's go talk about what a latent defect is. [00:24:16] Speaker 00: Mexia and cases of its nature are ones where they say, you bought the car or you bought the product, there was some latent defect in that it was not visible to you. [00:24:28] Speaker 00: but later manifested after the warranty. [00:24:31] Speaker 00: And the example that comes to mind is a case that Mexia was grounded in, which was somebody bought a boat, I believe, or some other thing that was built with wood that was filled with some type of pest that was eating its way through. [00:24:46] Speaker 00: And the pests were already in there, just wasn't apparent. [00:24:49] Speaker 00: They didn't eat their way through the wood until after the warranty expired. [00:24:53] Speaker 00: That's a latent defect. [00:24:54] Speaker 02: Well, I guess the way you described these hoses is they were already degrading. [00:24:57] Speaker 02: They just hadn't gone all the way yet. [00:24:58] Speaker 00: That's actually not true. [00:24:59] Speaker 00: When they bought the car, there's nothing wrong with the hoses. [00:25:02] Speaker 02: Well, but you said it's always... I mean, you started your argument by saying this isn't a surprise because everyone knows hoses degrade gradually. [00:25:08] Speaker 00: Well, and if that's the logic, Your Honor, then every part in the car at some point will even... Your tires are... You know they're going to wear down after you drive them. [00:25:19] Speaker 00: So is that a latent defect? [00:25:20] Speaker 00: No, that's wear and tear. [00:25:21] Speaker 00: It's normal, ordinary use of the vehicle. [00:25:23] Speaker 00: As vehicles get driven, I mean, manufacturers give limited warranties for a reason because they know that after some time parts will fail. [00:25:32] Speaker 00: It's limiting, that's the whole point of an express warranty is to clearly demark the point in time when the risk of a product failure shifts from the consumer, I'm sorry, from the manufacturer to the consumer. [00:25:47] Speaker 02: That's the whole point of a- I thought you were going to argue that California has this outlier case, but California requires privity so you can get rid of California and then you do the other states maybe the way you're saying. [00:25:57] Speaker 00: Well, that's true too, but California has privity only for a UCC-based breach of implied warranty claim. [00:26:06] Speaker 00: It does not require privity for Song Beverly, and I don't remember, candidly, if they did sue under Song Beverly or not. [00:26:13] Speaker 00: I could look it up, but that's probably not the best use of my time. [00:26:16] Speaker 01: Finally making me realize why everything breaks down after the warranty ends. [00:26:22] Speaker 00: Right, but because Your Honor, this is a mechanical part. [00:26:29] Speaker 00: things are moving things i mean that there's a reason why i'm just saying i'm thinking vacuum cleaners refrigerator everything correct so but but those those are those are not products that have a latent defect those are products that are being used and eventually i'm actually run out their useful life guess what that was a softball [00:26:48] Speaker 00: Yes. [00:26:49] Speaker 00: No, I'm not, I'm not, I'm not, I'm not fighting on it. [00:26:51] Speaker 00: My point is, and so on the implied warranty issue, the implied warranty by the terms of the express warranty had lapsed and that's what they're suing for. [00:27:01] Speaker 00: So let's say we don't, you don't affirm on the basis of a, [00:27:05] Speaker 00: of the unreasonable safety defect on the individual claims, both for implied warranty. [00:27:12] Speaker 00: There's no allegation that the implied warranty was breached within the implied warranty period, and there's no exception that applies here. [00:27:19] Speaker 00: And there's no allegation of sufficient facts to allege knowledge for a consumer fraud claim. [00:27:26] Speaker 00: And I think it's pretty telling that they chose to appeal rather than amend. [00:27:30] Speaker 00: The court gave them leave to amend the consumer protection claims. [00:27:34] Speaker 00: So if you had better facts, you certainly had the chance to plead it, but I think they just decided, well, and I think counsel just said, we were happy with the allegation. [00:27:44] Speaker 00: So it's a textbook case of they've pled their best case. [00:27:49] Speaker 00: on both issues. [00:27:51] Speaker 00: And even if the court were to disagree on the unreasonable safety defect finding, the district court's order can and should be affirmed on the implied warranty and the consumer protection claims on the alternative basis that we've argued. [00:28:06] Speaker 00: Unless the court has questions, I'll give back some of your time. [00:28:10] Speaker 01: Okay, thank you. [00:28:12] Speaker 01: Thank you. [00:28:13] Speaker 01: Mr. Strauss, you reserved some time. [00:28:22] Speaker 03: So if I might, I'd like to just speak to a couple of the arguments that defense counsel has made, particularly this premature failure argument, which I would submit respectfully is sort of a clever changing of what the allegations actually are, right? [00:28:41] Speaker 03: So the word premature is used in the complaint a number of times, but I think it's important to mention that the very first paragraph of our factual allegations say, [00:28:49] Speaker 03: Consumers now not only expect their vehicles to come equipped with the dependable AC system, they expect the system to work throughout the vehicle's service life. [00:28:59] Speaker 03: And that informs any time that we're using the phrase, which is used three times, prematurely and well in advance of expected useful life. [00:29:07] Speaker 03: The expected useful life of the air conditioner is the vehicle service life, as we said. [00:29:13] Speaker 03: A number of times at ER 89, we say that the AC system malfunctioned suddenly and without warning. [00:29:20] Speaker 03: and er 92 because the defects and internal mechanical components and manifests suddenly plaintiff and class members have no warning that defect has manifested until it causes the entire AC system to fail so just because the word premature is used in the complaint [00:29:37] Speaker 03: There's no allegation here that this is a regular, that the air, that the air conditioner system is a regular wear and tear, you know, component, the way a brakes are, or, you know, the way some other components of an automobile that you expect to fail at a certain point in time, and then they're replaced. [00:29:56] Speaker 03: The AC system is not that way. [00:29:58] Speaker 02: And therefore... So this is the latent defect argument that California allows, but I think you are going to look at whether other states do. [00:30:04] Speaker 03: Yeah, so one thing is important to mention that there are a number of, obviously, our arguments here is that [00:30:12] Speaker 03: The defect is system-wide, and the extended warranty that defendants rely on was just for the condenser. [00:30:21] Speaker 03: We argue that the defect is in the compressor, the evaporator, and also in some of the component parts of the air conditioner. [00:30:29] Speaker 03: And therefore, there's been a number of people, including some of our plaintiffs here, that brought their car into [00:30:36] Speaker 03: Authorized Honda dealer with these complaints their AC is not working and they were told that they were not covered Because they're not part of the the extended warranty, right? [00:30:48] Speaker 03: So there is an extended warranty. [00:30:49] Speaker 03: It only covers the condenser We are arguing that that's insufficient that there's other Defects and and I can point to a number of plaintiffs here who who brought their cars in within the warranty period and were denied that warranty because the [00:31:03] Speaker 03: defendant has closed the parameters of that of what they consider the defect inappropriately. [00:31:13] Speaker 02: And so on these extended warranties this is where we didn't have the contract right? [00:31:17] Speaker 03: The extended warranty was made was as a result of a technical service bulletin or in conjunction with a technical service bulletin that was issued during the pendency of the predecessor case which was Elkins. [00:31:32] Speaker 03: So the extended warranty extended it 10 more years. [00:31:36] Speaker 03: But again, it was only specifically to the condenser. [00:31:39] Speaker 03: And our allegations are clear that we are alleging that the defect affects the entire system because it's based on or as the result of the new refrigerant that they started using in the 2016 model. [00:31:53] Speaker 03: And so we do have a number of plaintiffs here who have tried to take advantage of [00:31:57] Speaker 03: not only the original warranty, but also the extended warranty, because the other aspect here is that for a while, defendant was saying that this was not a defect in the system. [00:32:08] Speaker 03: This was before they extended the warranty by 10 years, not a defect in the system. [00:32:12] Speaker 03: This is road debris and other things that come up and hit the AC system from below, and therefore it's not covered under the warranty. [00:32:21] Speaker 03: And they rejected a number of legitimate warranty claims. [00:32:24] Speaker 03: I say legitimate in terms of the timing of the complaint to the dealership and so you know part of our allegations is that one of the fundamental defects here is that the system is not strong enough to protect against foreseeable and regular use like road debris and things like that in addition to to the other defects some of which you spoke to in terms of the hoses and things so [00:32:52] Speaker 03: If, of course, if you have any more questions, I'm happy to answer them. [00:32:56] Speaker 03: But I know that defendant spoke, you know, at length about the premature issue and that that takes away the latency. [00:33:04] Speaker 03: And I think that the, you know, they use words like not wholly unexpected when we use words in our allegations suddenly and without warning. [00:33:13] Speaker 03: This is not [00:33:14] Speaker 03: You know, that is just a play on words, in my opinion, that you're picking out the word prematurely out of context and trying to say that we're alleging some sort of war. [00:33:23] Speaker 01: Thank you, counsel. [00:33:24] Speaker 01: Well, over your time, Wong versus American Honda Motor Co. [00:33:29] Speaker 01: will be submitted, and this session of the court will be adjourned for today. [00:33:33] Speaker 01: Thank you. [00:33:35] Speaker 02: All rise. [00:33:41] Speaker 02: That's it. [00:33:41] Speaker 02: This court for this session stands adjourned.