O'Melveny Persuades Ninth Circuit to Affirm Dismissal of Class Action Against Ford Motor Company

June 09, 2009

For Immediate Release
Piper Hall
O'Melveny & Myers LLP

Sonja Steptoe
O'Melveny & Myers LLP

Los Angeles, CA - O’Melveny & Myers LLP achieved a significant victory on behalf of Ford Motor Company on Monday when the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a class action brought against automaker.

Newport Beach partner Thomas Riordan and counsel Molly Magnuson were the principal architects of the brief and arguments. They were assisted by associate Jillian Allen, paralegal Charmy Harker, and legal assistant Terry Grossman.

The lawsuit, Kearns v. Ford, was brought by a purchaser of a Certified Pre-Owned (CPO) Ford vehicle who alleged that Ford promoted and advertised the CPO program by claiming that CPO vehicles received a more rigorous inspection than typical used vehicles, and therefore were more reliable, more roadworthy, and safer than other used vehicles. According to the plaintiff, these statements were misleading because CPO vehicles were purportedly no different than other used vehicles, yet Ford and its “co-conspirator” dealers charged a premium for CPO vehicles. Plaintiffs asserted two claims, one under California’s Business and Professions Code and the other under California’s Consumer Legal Remedies Act.

The plaintiff originally filed in California State Court, but O’Melveny removed the case to federal court for diversity jurisdiction. The plaintiff sought remand back to state court under the “local controversy exception” of the Class Actions Fairness Act of 2005, but in one of the earliest federal court decisions to address this exception, the district court denied remand.

The trial court dismissed the plaintiff’s Third Amended Complaint for failing to meet the heightened pleading standards of Federal Rule of Civil Procedure 9(b). The Ninth Circuit affirmed on those grounds, stating that in federal court any claims that “sound in fraud” – and these include UCL and CLRA claims – must be plead with sufficient particularity if they are based on a fraud theory.

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