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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`RACHAEL SHAY, individually and on
`behalf of all others similarly situated,
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`Plaintiff,
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`v.
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`APPLE INC. and APPLE VALUE
`SERVICES, LLC,
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`Defendant.
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` Case No.: 20cv1629-GPC(BLM)
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`ORDER GRANTING DEFENDANTS’
`PARTIAL MOTION TO DISMISS
`THE SECOND AMENDED
`COMPLAINT WITHOUT LEAVE
`TO AMEND
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`[DKT. NO. 21.]
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` Before the Court is Defendants’ partial motion to dismiss the second amended
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`complaint. (Dkt. No. 21.) Plaintiff filed an opposition and Defendants replied. (Dkt.
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`Nos. 23, 24.) Based on the reasoning below, the Court GRANTS Defendants’ partial
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`motion to dismiss the second amended complaint without leave to amend.
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`Background
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`This case was removed from state court on August 21, 2020. (Dkt. No. 1.) On
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`January 8, 2021, the Court granted in part and denied in part Defendants’ motion to
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`dismiss the first amended complaint with leave to amend. (Dkt. No. 17.) On January 28,
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`2021, Plaintiff Rachael Shay (“Plaintiff”) filed the operative putative second amended
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`class action complaint (“SAC”) against Defendants Apple, Inc. and Apple Value
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`20cv1629-GPC(BLM)
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`Case 3:20-cv-01629-GPC-BLM Document 27 Filed 05/03/21 PageID.349 Page 2 of 13
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`Services, LLC (“Defendants” or “Apple”) for claims under the 1) California Legal
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`Remedies Act, (“CLRA”), California Civil Code §1750 et seq.; 2) violations of the
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`Unfair Competition Law (“UCL”), California Business &Professions Code section 17200
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`et. seq.; 3) negligent misrepresentation; and 4) breach of the implied warranty of
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`merchantability. (Dkt. No. 18, SAC ¶¶ 41-88.)
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`The SAC alleges that Defendants manufactured, marketed, sold and/or distributed
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`valueless Apple gift cards that they knew or should have known was subject to an
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`“ongoing scam where the funds on the gift cards are fraudulently redeemed by third
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`parties accessing the Personal Identification Number (“PIN”) prior to use by the
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`consumer.” (Id., SAC ¶ 2.) On April 3, 2020, Plaintiff purchased a $50 Apple gift card
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`from Walmart in Encinitas, CA as a gift for her son. (Id. ¶ 10.) When her son attempted
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`to load the gift card, he received a message that the gift card had already been redeemed.
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`(Id.) Plaintiff contacted Defendants and was informed that the gift card was redeemed by
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`another account on April 3, 2020, the same day she bought the card, and the card no
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`longer had any value. (Id.) Defendants would not provide any additional information
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`about who redeemed the code, other than it was an account unrelated to Plaintiff or her
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`son. (Id.) Defendants informed her that there was nothing they could do for her, that her
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`case was closed, and any further contact would go unanswered. (Id.) If Plaintiff had
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`known about the truth about the defect of Defendants’ gift card, she would not have
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`purchased it. (Id.)
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`Plaintiff seeks to bring this class action on behalf of the following:
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`Nationwide Class:
`All consumers in the United States who purchased an Apple gift card
`wherein the funds on the Apple gift card was (sic) redeemed prior to use by
`the consumer. Excluded from this Class are Defendants and their officers,
`directors and employees, and those who purchased Apple gift cards for the
`purpose of resale.
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`California Subclass:
`All consumers in the State of California who purchased an Apple gift card
`wherein the funds on the Apple gift card was (sic) redeemed prior to use by
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`Case 3:20-cv-01629-GPC-BLM Document 27 Filed 05/03/21 PageID.350 Page 3 of 13
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`the consumer. Excluded from this Class are Defendants and their officers,
`directors and employees, and those who purchased Apple gift cards for the
`purpose of resale.
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`(Id. ¶ 32.)
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`Defendants move to dismiss the UCL claim in its entirety, the CLRA to the extent
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`she seeks equitable relief in addition to or in lieu of damages, and the breach of the
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`implied warranty of merchantability. (Dkt. No. 21.) Plaintiff filed an opposition and
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`Defendants filed a reply. (Dkt. Nos. 23, 24.)
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`Discussion
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`A. Legal Standard on Federal Rule of Civil Procedure 12(b)(6)
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`Federal Rule of Civil Procedure (“Rule”) 12(b)(6) permits dismissal for “failure to
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`state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal
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`under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or
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`sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police
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`Dep’t., 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure
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`8(a)(2), the plaintiff is required only to set forth a “short and plain statement of the claim
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`showing that the pleader is entitled to relief,” and “give the defendant fair notice of what
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`the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly,
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`550 U.S. 544, 555 (2007).
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`A complaint may survive a motion to dismiss only if, taking all well-pleaded
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`factual allegations as true, it contains enough facts to “state a claim to relief that is
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`plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
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`550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
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`content that allows the court to draw the reasonable inference that the defendant is liable
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`for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of
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`action, supported by mere conclusory statements, do not suffice.” Id. “In sum, for a
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`complaint to survive a motion to dismiss, the non-conclusory factual content, and
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`reasonable inferences from that content, must be plausibly suggestive of a claim entitling
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`20cv1629-GPC(BLM)
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`Case 3:20-cv-01629-GPC-BLM Document 27 Filed 05/03/21 PageID.351 Page 4 of 13
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`the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009)
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`(quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as true all
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`facts alleged in the complaint, and draws all reasonable inferences in favor of the
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`plaintiff. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009).
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`Where a motion to dismiss is granted, “leave to amend should be granted ‘unless
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`the court determines that the allegation of other facts consistent with the challenged
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`pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc.,
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`957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture
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`Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to amend would
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`be futile, the Court may deny leave to amend. See DeSoto, 957 F.2d at 658; Schreiber,
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`B. UCL and CLRA Claims for Failing to Plead Inadequate Remedy at Law
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`Defendants move to dismiss the UCL claim and the CLRA claim to the extent it
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`seeks equitable relief arguing that Plaintiff has not alleged an inadequate remedy at law
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`relying on Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. June 17, 2020).
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`(Dkt. No. 21 at 8-11.1) Plaintiff opposes arguing it can seek both actual damages and
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`equitable relief relying on Moore v. Mars Petcare U.S., Inc., 966 F.3d 1007, 1021 n. 13
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`(9th Cir. July 28, 2020).
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`Under the UCL, a plaintiff may only seek the equitable relief of restitution and/or
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`an injunction. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144
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`(2013) (“Through the UCL a plaintiff may obtain restitution and/or injunctive relief
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`against unfair or unlawful practices.”). The CLRA allows for a number of remedies
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`including actual damages, restitution, injunctive relief and punitive damages. See Cal.
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`Civ. Code § 1780.
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`1 Page numbers are based on the CM/ECF pagination.
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`The SAC seeks restitution and injunctive relief under the CLRA and UCL claims
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`and alleges that “[i]n the event adequate legal remedies are lacking”, Plaintiff seeks an
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`injunction and restitution. (Dkt. No. 18, SAC ¶¶ 46, 65.)
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`In Sonner, the Ninth Circuit, relying on United States Supreme Court precedent,
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`held that “traditional principles governing equitable remedies in federal courts, including
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`the requisite inadequacy of legal remedies, apply when a party requests restitution under
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`the UCL and CLRA in a diversity action.2” Sonner v. Premier Nutrition Corp., 971 F.3d
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`834, 844 (9th Cir. 2020). In line with this, the court held that a plaintiff must allege that
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`she “lacks an adequate remedy at law before securing equitable restitution for past harm
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`under the UCL and CLRA.” Id. (citations omitted). Pointing out that the operative
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`complaint did not allege that Sonner lacked an adequate legal remedy and the equitable
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`restitution she sought was the same as damages she sought to compensate for the same
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`past harm, the Ninth Circuit affirmed dismissal of the equitable restitution claim under
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`the UCL and CLRA. Sonner, 971 F.3d at 844 (citing O'Shea v. Littleton, 414 U.S. 488,
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`502 (1974) (holding that a complaint seeking equitable relief failed because it did not
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`plead “the basic requisites of the issuance of equitable relief” including “the inadequacy
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`While Sonner’s holding was limited to the equitable relief of restitution, Sonner,
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`971 F.3d at 842 (noting that “injunctive relief [was] not at issue”), district courts have
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`held that the “adequate remedy at law” requirement applies to equitable relief, which
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`includes injunctive relief claims. See Audrey Heredia v. Sunrise Senior Living LLC, Case
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`No. 8:18-cv-01974-JLS-JDE, 2021 WL 819159, at *4 (C.D. Cal. Feb. 10, 2021)
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`(inadequate remedy at law applies to all claims for equitable relief) (citing
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`IntegrityMessageBoards.com v. Facebook, Inc., No. 18-CV-05286-PJH, 2020 WL
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`2 The SAC alleges CAFA jurisdiction. (Dkt. No. 18, SAC ¶ 6). CAFA vests federal courts with
`“’original’ diversity jurisdiction over class actions.” Serrano v. 180 Connect, Inc., 478 F.3d 1018,
`1020–21 (9th Cir. 2007). Thus, the reasoning of Sonner applies to this case.
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`6544411, at *5 (N.D. Cal. Nov. 6, 2020) (“Whatever the facts before the panel in Sonner,
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`the Supreme Court in York3 did not draw any distinction among the various forms of
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`equitable relief when requiring the absence of a ‘plain, adequate, and complete remedy at
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`law’ to obtain it.”); Huynh v. Quora, Inc., No. 5:18-CV-07597-BLF, 2020 WL 7495097,
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`at *19 (N.D. Cal. Dec. 21, 2020) (“Cases in this Circuit have held that Sonner extends to
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`claims for injunctive relief.”) (collecting cases); In re MacBook Keyboard Litig., No.
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`5:18CV2813-EJD, 2020 WL 6047253, at *3 (N.D. Cal. Oct. 13, 2020) (“[N]umerous
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`courts in this circuit have applied Sonner to injunctive relief claims.”)).
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`In opposition, Plaintiff argues that the Ninth Circuit’s “binding” ruling in Moore
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`applies in this case. (Dkt. No. 23 at 8-12.) In Moore, the Ninth Circuit reversed the
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`district court’s dismissal order on the UCL, CLRA and False Advertising Law (“FAL”)
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`claims concluding that the plaintiffs adequately alleged these claims under Rule 12(b)(6)
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`and Rule 9(b). Moore, 966 F.3d at 1016-17. In a footnote, the court rejected the
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`defendants’ additional argument that the plaintiffs could not seek equitable relief under
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`the UCL or FAL because the CLRA provided an adequate legal remedy. Id. at 1021 n.
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`13. The court summarily stated that the UCL, FAL and CLRA “explicitly provide that
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`remedies under each act are cumulative to each other.” Id. Plaintiff argues that Moore
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`resolved the split of authority in favor of allowing UCL claims to proceed with legal
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`claims.
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`The Court disagrees. First, the footnote in Moore is dicta and not binding on this
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`Court. Unlike Sonner which provided an analysis on equitable remedies in federal court,
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`Moore makes a summary statement without any analysis or mention of Sonner.
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`Moreover, as one district court noted, the court in Moore only stated that the remedies
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`under the UCL, FAL, and CLRA are “cumulative with one another, not with separate
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`legal remedies.” See In re Subaru Battery Drain Prods. Liab. Litig., Civil Action No.
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`3 Guaranty Trust Co. of New York v. York, 326 U.S. 99 (1945).
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`1:20-cv-03095-JHR-JS, 2021 WL 1207791, at *28 (D.N.J. Mar. 31, 2021) (“Plaintiffs
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`cannot seek equitable remedies under the UCL and CLRA that are cumulative to their
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`legal remedies.”). In addition, all district courts that have been confronted with the
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`argument that Moore should be the authority courts should follow instead of Sonner have
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`all rejected the significance of the footnote in Moore. See Sharma v. Volkswagen AG, ---
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`F. Supp. 3d ---, 2021 WL 912271, at *8 (N.D. Cal. Mar. 9, 2021) (rejecting plaintiffs’
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`argument on applicability of Moore); In re Subaru Battery Drain Prods. Liab. Litig.,
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`2021 WL 1207791, at *28; Audrey Heredia, 2021 WL 819159, at *3 (“The Court,
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`however, concludes that the clear holding in Sonner, not the dictum in Moore, controls
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`whether Plaintiffs' UCL claim is subject to an “adequate legal remedy” requirement.”);
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`IntegrityMessageBoards.com v. Facebook, Inc., 2020 WL 6544411, at *4. Finally,
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`Sonner, and not Moore, actually resolved the split in authority on whether plaintiff must
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`plead an inadequate remedy at law in order to seek equitable relief under the UCL and
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`CLRA. See Anderson v. Apple Inc., --- F. Supp. 3d ---, 2020 WL 6710101, at *7 (N.D.
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`Cal. Nov. 16, 2020) (Sonner appears to have resolved the split in authority). Thus, the
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`Court disagrees with Plaintiff’s assertion that Moore’s analysis is sound and binding on
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`this Court.
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`Plaintiff also argues that reliance on Sonner is misplaced due to the procedural
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`posture of the case as the UCL claim along with a legal claim proceeded until the eve of
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`trial. (Dkt. No. 23 at 14-15.) However, district courts have rejected a plaintiff’s attempt
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`to distinguish Sonner based on the procedural posture of the case. See Teresa Adams v.
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`Cole Haan, LLC, Case No. Sacv 20-913 JVS (DFMx), 2020 WL 5648605, at *2 (C.D.
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`Cal. Sept. 3, 2020) (procedural posture in Sonner did not affect analysis of the traditional
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`division between law and equity); Zaback v. Kellogg Sales Co., No. 20-00268 BEN
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`MSB, 2020 WL 6381987, at *4 (S.D. Cal. Oct. 29, 2020) (collecting cases that have
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`“applied Sonner to dismiss complaints in cases involving similar claims at the more
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`familiar early stages of litigation”). In fact, in Sonner, the Ninth Circuit pointed out that
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`the operative complaint did not allege that the plaintiff lacked an adequate legal remedy.
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`See Sonner, 971 F.3d at 844. This suggests that a plaintiff must plead inadequate legal
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`remedies in the operative pleading to allege claims for equitable relief under the UCL and
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`CLRA.
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`Plaintiff further attempts to distinguish Sonner by noting that Judge Seeborg, the
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`district judge in the Sonner case, subsequently issued decisions in Bland v. Sequel Nat.
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`Ltd., No. 18-cv-04767-RS, 2019 WL 4674337 (N.D. Cal. Aug. 2, 2019) and Marshall v.
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`Danone US, Inc., 402 F. Supp. 3d 831 (N.D. Cal. Sept. 13, 2019) that distinguished his
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`own decision in Sonner. The district court in Sharma rejected the same argument noting
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`that Judge Seeborg decided both those cases before the Ninth Circuit’s decision in
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`Sonner. Sharma, 2021 WL 912271, at *7. For the same reasons, Plaintiff’s reliance on
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`Judge Seeborg’s pre-Sonner cases is not supportive.
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`Finally, Plaintiff argues that under Rule 8, she may seek equitable claims in the
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`alternative. (Dkt. No. 23 at 12-13.) Yet, all the cases she cites pre-date Sonner. On this
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`same argument, the Court agrees with the district court in Sharma stating that “[t]he issue
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`is not whether a pleading may seek distinct forms of relief in the alternative, but rather
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`whether a prayer for equitable relief states a claim if the pleading does not demonstrate
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`the inadequacy of a legal remedy. On that point, Sonner holds that it does not.” See
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`Sharma, 2021 WL 912271, at *8. Moreover, Plaintiff’s reliance on Moyle v. Liberty
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`Mutual Retirement Benefit Plan, 823 F.3d 948, 962 (9th Cir. 2016), for the proposition
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`that Rule 8 allows “equitable remedies alongside a legal claim that separately ‘provides
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`adequate relief””, (Dkt. No. 23 at 13), is distinguishable as Moyle dealt with ERISA
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`which has its own distinct purpose of protecting participants’ and beneficiaries’ interests.
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`See IntegrityMessageBoards.com, 2020 WL 6544411, at *5 (rejecting the plaintiff’s
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`reliance on Moyle to support that argument that equitable remedies may be plead in the
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`alternative). Therefore, Plaintiff’s Rule 8 argument is not convincing to the Court.
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`In sum, the Court concludes that Sonner is binding on this Court and now
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`considers whether Plaintiff has plausibly alleged an inadequate remedy at law. In its
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`prior order, the Court granted Plaintiff leave to amend and explained that Sonner required
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`that Plaintiff must allege she “lacks an adequate legal remedy.” (Dkt. No. 17 at 15-16.)
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`In the SAC, Plaintiff solely adds the allegation, “In the event adequate legal remedies are
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`lacking . . . Plaintiff and the class seek a court order enjoining the . . . wrongful acts and
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`practices of Defendants and for restitution and disgorgement. (Dkt. No. 18, SAC ¶ 46;
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`see id. ¶ 65.) A contingent event does not support an allegation that Plaintiff has an
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`inadequate remedy at law. Plaintiff has not demonstrated that this allegation is sufficient
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`to support equitable relief under Sonner. Accordingly, the Court GRANTS Defendants’
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`motion to dismiss the UCL claim and the equitable relief she seeks in the CLRA claim.
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`C.
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`Breach of Implied Warranty of Merchantability
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`Defendants move to dismiss the breach of implied warranty claim because Plaintiff
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`has not alleged she is in privity with Apple or that an exception to the privity requirement
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`applies. (Dkt. No. 21-1 at 11-13.) Plaintiff responds that vertical privity is not required
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`because she is a third-party beneficiary who purchased the gift card from a third party
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`acting as an agent for Defendants. (Dkt. No. 23 at 16-18.)
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`On privity, the SAC now alleges, “Plaintiff and Class Members purchased the
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`Apple gift cards from Apple gift card retailers that are agents of Defendants. However,
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`the retailers were not intended to be the ultimate consumers of the Apple gift cards and
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`have no implied warranty rights. Instead, Plaintiff and Class Members were the intended
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`ultimate consumers of the Apple gift cards. As such, Plaintiff and Class Members assert
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`their implied warranty rights as third party beneficiaries.” (Dkt. No. 18, SAC ¶ 84.)
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`The California Commercial Code “implies a warranty of merchantability that
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`goods ‘[a]re fit for ordinary purposes for which such goods are used.’” Birdsong v.
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`Apple, Inc., 590 F.3d 955, 958 (9th Cir. 2009) (quoting Cal. Com. Code § 2314(2)(c)).
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`“Under California Commercial Code section 2314, . . . a plaintiff asserting breach of
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`warranty claims must stand in vertical contractual privity with the defendant.” Clemens
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`v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008); All West Elecs., Inc. v.
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`M–B–W, Inc., 64 Cal. App. 4th 717, 725 (1998) (“The general rule is that privity of
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`contract is required in an action for breach of either express or implied warranty and that
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`there is no privity between the original seller and a subsequent purchaser who is in no
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`way a party to the original sale.”); Anthony v. Kelsey–Hayes Co., 25 Cal. App. 3d 442,
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`448 (1972) (“It is settled law in California that privity between the parties is a necessary
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`element to recovery on a breach of an implied warranty of [merchantability or] fitness for
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`the buyer's use, with exceptions not applicable here.”). “A buyer and seller stand in
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`privity if they are in adjoining links of the distribution chain.” Clemens, 534 F.3d at
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`1023. An “end consumer” who “buys from a retailer is not in privity with a
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`manufacturer.” Id.
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`In Clemens, the Ninth Circuit identified a number of specific exceptions to the
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`privity rule such as cases when a “plaintiff relies on written labels or advertisements of a
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`manufacturer” and other “special cases involving foodstuffs, pesticides, and
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`pharmaceuticals, and where the end user is an employee of the purchaser.” Id. at 1023
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`(citing Burr v. Sherwin Williams Co., 42 Cal. 2d 682, 695-96 (1954); Windham at Carmel
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`Mountain Ranch Ass'n v. Superior Ct., 109 Cal. App. 4th 1162, 1169 (2003); Fieldstone
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`Co. v. Briggs Plumbing Prods., Inc., 54 Cal. App. 4th 357, 369 (1997); Gottsdanker v.
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`Cutter Labs., 182 Cal. App. 2d 602, 608 (1960)). A direct dealing exception to the
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`privity requirement was also recognized by the court of appeal in U.S. Roofing, Inc. v.
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`Credit Alliance Corp. 228 Cal. App. 3d 1431, 1442 (1991). Cardinal Health 301, Inc. v.
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`Tyco Electronics Corp.,169 Cal. App. 4th 116, 138-39 (2008) (applying direct dealing
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`exception). The Ninth Circuit noted that California “has painstakingly established the
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`scope of the privity requirement under [ ] section 2314, and a federal court sitting in
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`diversity is not free to create new exceptions to it.” Clemens, 534 F.3d at 1024.
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`Before and after the Ninth Circuit ruling in Clemens, district courts in California
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`have been split on whether an exception to the privity requirement exists for a breach of
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`implied warranty of merchantability claim when a plaintiff can show that he or she was a
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`third-party beneficiary of a contract between the defendant and a third party. Compare
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`Zeiger v. WellPet LLC, 304 F. Supp. 3d 837, 854 (N.D. Cal. 2018) (recognizing split in
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`authority but adopting third-party beneficiary exception); In re MyFord Touch Consumer
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`Litig., 46 F. Supp. 3d 936, 984 (N.D. Cal. 2014) (“the Court concludes that the third-
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`party beneficiary exception remains viable under California law.”); In re Sony Vaio
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`Computer Notebook Trackpad Litig., No. 09CV2109 BEN (RBB), 2010 WL 4262191, at
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`*3 (S.D. Cal. Oct. 28, 2010) (finding that the plaintiffs had plausibly pleaded that the
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`exception applied when they purchased a Sony laptop from Best Buy, which they alleged
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`was an authorized Sony retailer and service facility); Kearney v. Hyundai Motor Am., No.
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`SACV09-1298-JST MLGX, 2010 WL 8251077, at *10 (C.D. Cal. Dec. 17, 2010) with
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`Skiathitis v. Nyko Techs., Inc., No. 18-3584, 2018 WL 6427360, at *11 (C.D. Cal. Sept.
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`12, 2018) (“The applicability of the third-party beneficiary exception to retail consumers
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`like Plaintiffs is far from settled, but the Court concludes that the best reading of
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`California law is that the exception does not apply.”); Xavier v. Philip Morris USA, Inc.,
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`787 F. Supp. 2d 1075, 1083 (N.D. Cal. 2011) (finding that the exception does not apply
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`because “[n]o reported California decision has held that the purchase of a consumer
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`product may dodge the privity rule by asserting that he or she is a third-party beneficiary
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`of the distribution agreements linking the manufacturer to the retailer who ultimately
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`made the sale”); Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1141 (C.D. Cal.
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`2005) (third-party beneficiary exception does not allow a consumer who purchased a
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`laptop from BestBuy.com to bring a breach of implied warranty claim against the laptop
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`manufacturer).
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`It is notable that “no published decision of a California court has applied this [third
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`party beneficiary exception] doctrine in the context of a consumer claim against a product
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`manufacturer.” Loomis v. Slendertone Distrib., Inc., 420 F. Supp. 3d 1046, 1089 (S.D.
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`Cal. 2019) (quoting In re Seagate Tech. LLC Litig., 233 F. Supp. 3d 776, 787 (N.D. Cal.
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`2017)); see also Xavier v. Philip Morris USA, Inc., 787 F.Supp.2d 1075, 1083 (N.D Cal.
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`2011) (“No reported California decision has held that the purchaser of a consumer
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`product may dodge the privity rule by asserting that he or she is a third-party beneficiary
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`of the distribution agreements linking the manufacturer to the retailer who ultimately
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`made the sale.”)
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`District courts that have adopted the third-party beneficiary exception theory rely
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`on Gilbert Fin. Corp. v. Steelform Contracting Co., 82 Cal. App. 3d 65, 69-70 (1978). In
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`that case, the court of appeal reversed the trial court’s dismissal of the breach of implied
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`warranty claim for lack of privity made against a roofing sub-contractor and held that the
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`plaintiff could bring such action for breach of an implied warranty of fitness against the
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`sub-contractor because he, the owner of a building who was not named in the contract,
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`was the intended third-party beneficiary of the contract between the contractor and the
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`roofing subcontractor. Id. at 69-70. The court of appeal noted that it did not have to
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`decide the privity issue because the plaintiff was a third-party beneficiary of the contract
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`between the contractor and sub-contractor and could therefore sue for breach of the
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`implied warranty of fitness. Id. at 69. Gilbert is specific to its facts and has limited
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`bearing on this case. While courts are split on recognition of the third-party beneficiary
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`exception to the privity requirement, the cases that recognize it require a plaintiff to show
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`that he was a third-party beneficiary of a contract between the defendant and a third
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`party. In re NVIDIA GPU Litig., No. C 08-04312 JW, 2009 WL 4020104, at *7 (N.D.
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`Cal. Nov. 19, 2009) (exception to the privity requirement for a breach of implied
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`warranty of merchantability claim if a plaintiff can show that he was a third party
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`beneficiary of a contract between the defendant and a third party); In re Nexus 6P Prod.
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`Liab. Litig., 293 F. Supp. 3d 888, 924 (N.D. Cal. 2018) (“Huawei concedes that the
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`relevant states allow plaintiffs to bring implied warranty claims in the absence of privity
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`if the plaintiff shows that he was a beneficiary to a contract between the defendant and a
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`To the extent that California recognizes a third-party beneficiary exception to the
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`privity requirement, Plaintiff has failed to allege a contract was entered into between
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`Walmart and Apple for Plaintiff’s benefit. Instead, Plaintiff merely alleges that the Apple
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`gift card retailers “are agents of Defendants” and that “the retailers were not intended to
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`be the ultimate consumers of the Apple gift cards and have no implied warranty rights.
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`Instead, Plaintiff and Class Members were the intended ultimate consumers of the Apple
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`12
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`Case 3:20-cv-01629-GPC-BLM Document 27 Filed 05/03/21 PageID.360 Page 13 of 13
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`
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`gift cards.” (Dkt. No. 18, SAC ¶ 84.) These new allegations in the SAC fail to allege the
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`existence of any contract between Walmart and Apple that benefitted Plaintiff.
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`Accordingly, Plaintiff has not alleged privity or any recognized privity exception
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`adopted by the Ninth Circuit or California courts. Thus, the implied breach of warranty
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`claim fails to state a claim and the Court GRANTS Defendants’ motion to dismiss the
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`breach of implied warranty of merchantability claim.
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`D.
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`Leave to Amend
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`In opposition, Plaintiff seeks leave to amend in the event the Court dismisses any
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`part of the SAC. (Dkt. No. 23 at 18.)
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`Where a motion to dismiss is granted, leave to amend should be granted “unless
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`the court determines that the allegation of other facts consistent with the challenged
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`pleading could not possibly cure the deficiency.” DeSoto, 957 F.2d at 658 (quoting
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`Schreiber Distrib. Co., 806 F.2d at 1401)). In other words, where leave to amend would
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`be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at 658; Schreiber,
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`806 F.2d at 1401. Here, because Plaintiff has failed to cure the deficiencies previously
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`identified, the Court DENIES Plaintiff leave to amend.
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`Conclusion
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`Based on the reasoning above, the Court GRANTS Defendants’ partial motion to
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`dismiss the UCL claim, the equitable relief sought in the CLRA claim and the breach of
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`implied warranty of merchantability claim without leave to amend.
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`IT IS SO ORDERED.
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`Dated: May 3, 2021
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`20cv1629-GPC(BLM)
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`