In Daniel v. Ford Motor Co., 2015 WL 7740646, at *2-4 (9th Cir. 2015), the Court of Appeals for the 9th Circuit stated that “The focus of this case is whether Ford Motor Company sold the plaintiffs a pig in the poke.” Cute. But, they felt the need to footnote what the quote actually meant:
The English colloquialisms such as “turn out to be a pig in a poke” or “buy a pig in a poke” mean that something is sold or bought without the buyer knowing its true nature or value, especially when buying without inspecting the item beforehand.
So, now we know. But, when a decision leads off like that, you usually know what the outcome is going to be: bad. Anyway, the 9th Circuit said that federal courts have to follow Mexia.
Pursuant to the Song–Beverly Consumer Warranty Act, “every sale of consumer goods that are sold at retail in this state shall be accompanied by the manufacturer’s and the retail seller’s implied warranty that the goods are merchantable.” Cal. Civ.Code § 1792. Pertinent to this appeal, the Act contains a one-year durational limitation: The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer. Where no duration for an express warranty is stated with respect to consumer goods, or parts thereof, the duration of the implied warranty shall be the maximum period prescribed above. Cal. Civ.Code § 1791.1(c) (emphasis added). Yet the California Court of Appeal held in Mexia v. Rinker Boat Co. that “[t]here is nothing that suggests a requirement that the purchaser discover and report to the seller a latent defect within that time period .” 95 Cal.Rptr.3d 285, 295 (Ct.App.2009) (emphasis added). “We ‘must follow the decision of the intermediate appellate courts of the state unless there is convincing evidence that the highest court of the state would decide differently.’ “ In re Schwarzkopf, 626 F.3d 1032, 1038 (9th Cir.2010) (quoting Owen ex. rel Owen v. United States, 713 F.2d 1461, 1464 (9th Cir.1983)). Here, there is not convincing evidence that the California Supreme Court would decide the latent defect discovery issue that was presented in Mexia differently. The California Supreme Court denied the Mexia defendants’ petition for review and denied a non-party’s request for “depublication” of the opinion. See Appellate Courts Case Information, The Judicial Branch of California, http://appellate cases.courtinfo.ca.gov/search/case/disposition.cfm?dist=0 & doc_id=1914874 & doc_no=S174901 (last visited Oct. 28, 2015). No published California Court of Appeal opinion has addressed or rejected the Mexia holding. Two unpublished decisions reiterated the one-year duration set forth in § 1791.1, but neither cited Mexia. Balakian v. Mercedes–Benz USA, LLC, No. F060461, 2011 WL 6826723, at *7 n. 8 (Cal.Ct.App. Dec. 29, 2011) (unpublished); Larsen v. Nissan N. Am., Inc., No. A121838, 2009 WL 1766797, at *6 (Cal. Ct.App. June 23, 2009) (unpublished). The two unpublished decisions that have referenced the Mexia rule did so without disapproval. Clark v. BMW of N. Am., LLC, B248593, 2014 WL 3907922, at *6 (Cal.Ct.App. Aug. 12, 2014) (unpublished); Lugo v. Good Guys Auto Sales, Inc., D061620, 2013 WL 5411650, at *7 (Cal.Ct.App. Sept. 27, 2013) (unpublished). While California federal district courts have given Mexia mixed treatment, see, e.g., Valencia v. Volkswagen Grp. of Am. Inc., ––– F.Supp.3d ––––, No. 15–cv–00887–HSG, 2015 WL 4747533, at *6–7 (N.D.Cal. Aug. 11, 2015) (discussing cases on both sides and distinguishing Mexia based on a reading that limits the holding to cases involving products that were unmerchantable at the time of purchase); Rossi v. Whirlpool Corp., No. 12–CV–125–JAM–JFM, 2013 WL 1312105, at *5 (E.D.Cal. Mar. 28, 2013) (rejecting Mexia ); Keegan v. Am. Honda Motor Co., 284 F.R.D. 504, 537 (C.D.Cal.2012) (following Mexia ), we must adhere to state court decisions—not federal court decisions—as the authoritative interpretation of state law. W. v. Am. Tel. & Tel. Co., 311 U.S. 223, 237–38 (1940). Ford argues that Mexia conflicts with the earlier decision in Atkinson v. Elk Corp. of Texas, 48 Cal.Rptr.3d 247 (Ct.App.2006). But Mexia and Atkinson are not in “plain conflict.” Cf. Owen ex. rel Owen, 713 F.2d at 1465. In Atkinson, the pertinent issue was “what is the duration of implied warranty of merchantability under Magnuson–Moss,” and the court concluded that § 1791.1 controls. 48 Cal.Rptr.3d at 257–59. The precise issue of whether § 1791.1 “create[s] a deadline for discovering latent defects,” which was addressed in Mexia, 95 Cal.Rptr.3d at 288, was not at issue in Atkinson. Additionally, the Mexia court relied on Atkinson approvingly without noting any inconsistency, id. at 295 n. 10, and Mexia is consistent with an earlier case, Hicks v. Kaufman & Broad Home Corp., 107 Cal.Rptr.2d 761, 768 (Ct.App.2001) (holding that “proof of breach of warranty does not require proof the product has malfunctioned but only that it contains an inherent defect which is substantially certain to result in malfunction during the useful life of the product”). Further, the Mexia decision is in line with “the policy repeatedly expressed by California courts of the need to construe the Song–Beverly Act so as to implement the legislative intent to expand consumer protection and remedies.” Mexia, 95 Cal.Rptr.3d at 296. Absent convincing evidence that the California Supreme Court would decide the issue in Mexia differently, its rule that § 1791.1 “does not create a deadline for discovering latent defects or for giving notice to the seller,” 95 Cal.Rptr.3d at 288, must be followed. Accordingly, the district court’s order granting summary judgment as to the Song–Beverly Consumer Warranty Act claims of Plaintiffs Hauser, Glass, and Duarte is reversed.