In Smith v. Ford Motor Co., 2011 WL 6322200 (9th Cir. 2011), the Court of Appeals for the Ninth Circuit rejected Plaintiffs’ CLRA and UCL class action based on the claim that an automobile manufacturer failed to disclose the risk that ignition locks in its Focus vehicles from model years 2000 through 2006 would fail after the warranty expired. The Court of Appeals explained:
A manufacturer cannot be found liable under the CLRA for failure to disclose a defect that manifests itself after expiration of the warranty period unless such omission (1) is “contrary to a representation actually made by the defendant” or (2) pertains to a “fact the defendant was obligated to disclose.” Daugherty v. Am. Honda Motor Co., Inc., 51 Cal.Rptr.3d 118, 126 (Cal.Ct.App.2006). As plaintiffs do not allege that Ford made affirmative representations concerning the ignition locks, the parties agree that plaintiffs cannot prevail absent a duty to disclose by Ford. ¶ Under California’s general law of fraud, a duty to disclose may arise, inter alia, when the defendant had exclusive knowledge of material facts not known to the plaintiff or when the defendant actively conceals a material fact from the plaintiff. See Limandri v. Judkins, 60 Cal.Rptr.2d 539, 543 (Cal.Ct.App.1997). This appeal largely centers on the question of whether California law creates a duty to disclose non-safety related defects that manifest only after the warranty period, absent any affirmative representations regarding those defects by the manufacturer. We agree with the district court that, under Daugherty, where a plaintiff’s claim is predicated on a manufacturer’s failure to inform its customers of a product’s likelihood of failing outside the warranty period, the risk posed by such asserted defect cannot be merely the economic cost of the product’s repair but must constitute a safety concern. 51 Cal.Rptr.3d at 127–128.