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Kearns v. Ford Motor Co. - 567 F.3d 1120 (9th Cir. 2009)

Rule:

Fed. R. Civ. P. 8(a)(2) requires a party's pleading to contain a short and plain statement of the claim showing that the pleader is entitled to relief. However, Fed. R. Civ. P. 9(b) requires that, when fraud is alleged, a party must state with particularity the circumstances constituting fraud. Where fraud is not an essential element of a claim, only those allegations of a complaint which aver fraud are subject to Rule 9(b)'s heightened pleading standard. Any averments which do not meet that standard should be disregarded, or stripped from the claim for failure to satisfy Rule 9(b). To the extent a party does not aver fraud, the party's allegations need only satisfy the requirements of Rule 8(a)(2). Fraud can be averred by specifically alleging fraud, or by alleging facts that necessarily constitute fraud (even if the word "fraud" is not used).

Facts:

Plaintiff William Ray Kearns filed a diversity class action in federal district court for himself and those similarly situated, claiming that defendant Ford Motor Company ("Ford") and its dealerships acted illegally to increase sales of their certified pre-owned ("CPO") vehicles, in violation of the California's Consumers Legal Remedies Act and California's Unfair Competition Law. Kearns claimed that by making false statements, Ford conspired to mislead customers into believing that the CPO program guaranteed a safer, more reliable, and more roadworthy used vehicle. Such statements were allegedly made to persuade purchasers to rely on the notion that CPO vehicles were safer than ordinary used vehicles due to the certification process. On Ford's motion, the district court dismissed Kearns's complaint for failure to plead fraud with particularity as required by Fed. R. Civ. P. 9(b) and granted Ford's request to strike the first footnote of Kearns' complaint. Kearns appealed, arguing that Rule 9(b) was not applicable to California's consumer protection statutes.

Issue:

Was Fed. R. Civ. P. 9(b) applicable to California's consumer protection statutes?

Answer:

Yes.

Conclusion:

The appellate court affirmed the district court's judgment, holding that Fed. R. Civ. P. 9(b) did apply to California's consumer protection statutes. It was well-settled that the Federal Rules of Civil Procedure applied in federal court, irrespective of the source of the subject matter jurisdiction, and irrespective of whether the substantive law at issue was state or federal. All of Kerns' claims were grounded in fraud, including the "nondisclosure" claims, and were properly dismissed for not being sufficiently pleaded.

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