In Gutierrez v. Carmax Auto Superstores California, 2018 WL 627453, at *14–16 (Cal.App. 5 Dist., 2018), the Court of Appeal found that failure to disclose that a part was the subject of a recall and was not repaired violated the CLRA.
Based on the statutory text, legislative history (which includes the National Consumer Act), the judicial decisions and statutes that existed when the CLRA was enacted, the subsequent case law, and the many amendments to the CLRA from 1975 through 2016, we join Klein, McAdams and the other cases concluding that failures to disclose material facts are actionable under the CLRA. In particular, we conclude paragraphs (5), (7) and (9) of subdivision (a) of Civil Code section 1770 proscribe material omissions in certain situations. Not every omission or nondisclosure of fact is actionable. Consequently, we must adopt a test identifying which omissions or nondisclosures fall within the scope of the CLRA. Stating that test in general terms, we conclude an omission is actionable under the CLRA if the omitted fact is (1) “contrary to a [material] representation actually made by the defendant” or (2) is “a fact the defendant was obliged to disclose.” (Daugherty, supra, 144 Cal.App.4th at p. 835, 51 Cal.Rptr.3d 118; see Rubenstein, supra, 14 Cal.App.5th at p. 881, 222 Cal.Rptr.3d 397; Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 255, 134 Cal.Rptr.3d 588 (Collins ).) Under the facts alleged in this case, we are concerned only with the second type of omitted fact and the question of whether CarMax had a duty to disclose a fact not made known to the plaintiff.. . . We conclude Gutierrez’s allegations are sufficient to establish CarMax had a duty to disclose the existence of the recall and the fact that the Hyundai’s stop lamp switch had not been replaced in accordance with the recall. First, the complaint alleged (1) the recall related to the stop lamp switch, which was a critical safety-related component of the vehicle’s braking system, and (2) it was unsafe to operate a vehicle with a defective stop lamp switch. . . .Accordingly, we conclude the factual allegation are sufficient to establish the “materiality” of the facts about the recall and the vehicle that CarMax did not disclose.. . .Second, the complaint alleged facts relevant to establishing a duty to disclose the material information by alleging the stop lamp switch was “a critical safety related component of the Hyundai braking system” and sales staff advised Gutierrez “that the Hyundai was in excellent condition since it passed a rigorous 125-point quality inspection.” A copy of the inspection certificate was attached to the complaint and it listed specific points relating to both the vehicle’s brake system and its lighting system, with “Brake lights” one of the specific 125 points inspected. The complaint also alleged CarMax engaged in misleading business practices by representing the vehicle passed a rigorous 125-point quality inspection, but not disclosing the vehicle was subject to a safety recall. A duty to disclose cannot exist if the defendant was not aware of the facts that were not disclosed. Here, the complaint did not specifically allege CarMax knew of the safety recall and that the stop lamp switch on the Hyundai had not been replaced in accordance with the recall notice. However, we conclude the facts alleged are sufficient to reasonably infer CarMax’s knowledge. For instance, the complaint alleges the only reason CarMax did not disclose the recall or have the recall work performed was CarMax deemed making money more important than protecting its customers from dangers relating to serious safety recalls. As the lack of knowledge would be a separate reason for not disclosing the recall, it is reasonable to infer from this allegation that CarMax actually knew of the recall. (See Code Civ. Proc., § 452 [construction of pleadings]. We conclude these allegations are sufficient to plead the existence of a duty to disclose information about the safety recall on the ground CarMax made partial representations about the vehicle’s braking and lighting systems and those representations were likely to mislead for want of communication of the facts about the recall.
CarMax contends we are required to find as a matter of law that the Gutierrez did not experience “any damage” for purposes of Civil Code section 1780, subdivision (a) because the potentially defective part (i.e., the stop lamp switch on the Hyundai) was replaced without charge. CarMax, however, has cited no authority for the principle that replacement negates “any damage” that a consumer might have experienced and thereby precludes the consumer from pursuing an injunction or restitution under Civil Code section 1780, subdivision (a)(2) & (3).20 Furthermore, based on the timing of the replacement of the Hyundai’s recalled stop lamp switch, it does not logically preclude Gutierrez from alleging and proving that the purchase would not have been made if the undisclosed information had been made known before the sale.