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May 11, 1995

NORMAN WEISS, on behalf of himself and others similarly situated, Plaintiffs,
MERCEDES-BENZ OF NORTH AMERICA, INC., Defendant. BERT M. BEZ, on behalf of himself and others similarly situated, Plaintiff, v. MERCEDES-BENZ OF NORTH AMERICA, INC., Defendant.

The opinion of the court was delivered by: BISSELL

 BISSELL, District Judge

 The applications presently before this Court arise out of the filing of two separate complaints requesting certification of a class against Mercedes-Benz of North America, Inc. ("Mercedes") on January 14, and 15, 1993. On May 24, 1993, an order consolidating Weiss v. Mercedes and Bez v. Mercedes for discovery purposes was entered. On June 14, 1993, both plaintiffs moved to amend their separate complaints.

 The plaintiffs initially moved for class certification in August 1993. This motion as well as defendant's cross-motion were withdrawn as the plaintiffs requested leave of court to amend their complaint for a second time. This Court granted leave for the plaintiffs to file their second amended complaints on November 24, 1993.

 The second amended complaints were filed on November 30, 1993 and moved to certify as a class:

all persons in the United States who purchased or leased any 1992 or 1993 Mercedes-Benz S class automobile.

 (Second Am. Compl of Norman Weiss and Bert M. Bez (hereinafter "Compl."[,] P 2). *fn1" As plaintiffs moved for class certification, defendant filed a cross-motion to dismiss the first cause of action in the second amended complaints. The first cause of action alleged that Mercedes violated section 43(a) of the Lanham Act, 15 U.S.C. ┬ž 1125(a) ("Lanham Act"). (Compl., P 25). This Court granted the cross-motion and dismissed the First Count in both actions. (Op. of Feb. 24, 1994). Mercedes then moved to dismiss both second amended complaints in their entirety on the ground that subject matter jurisdiction is absent.

 The plaintiffs' second amended complaint, in their current form, seek relief for the named plaintiffs and the other members of the proposed class against Mercedes for violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (Id. at 3). The plaintiffs allege further for themselves and the class that Mercedes committed common law fraud, breached an expressed warranty, breached an implied warranty, and made negligent misrepresentations. (Id.)

 Mercedes contended that this Court did not have subject matter jurisdiction to hear these claims since individual class members did not satisfy diversity jurisdiction's amount in controversy requirements. In a March 31, 1994 Order, Mercedes' motion to dismiss was denied. Subsequently, class certification was granted on April 28, 1994 pursuant to Rules 23(a) and (b)(3). In a letter accompanying the class certification Order, this Court stated that Mercedes might revisit the diversity issue after the class certification process had further evolved.


 Plaintiffs Weiss and Bez both own 1992 500 SEL Mercedes-Benz automobiles. (Compl., P 3). Norman Weiss is a resident of the State of Florida. (Weiss Compl., P 3). He bought his 500 SEL from a Mercedes dealer in Pompano Beach, Florida in November 1991. (Id., P 4). Bert Bez is a resident of the State of Michigan. (Bez Compl., P 3). Mr. Bez purchased his 500 SEL from a dealer in Lansing, Michigan. (Op. of Feb. 24, 1994 at 3). Defendant Mercedes is a corporation organized under Delaware law with its principal place of business in Montvale, New Jersey. (compl., P 4).

 The 500 SEL is one of several models in Mercedes' S-Class of automobiles. (Op. of Feb. 24, 1994 at 4). The S-Class was introduced in model year 1992. (Id.) All of Mercedes' S-Class models retail for more than $ 50,000 apiece. (Compl., P 4). Plaintiffs allege that all S-Class vehicles suffer from "a serious defect." (Op. of Feb. 24, 1994 at 4). The defect is alleged to be a tendency for the S-Class' steering system to vibrate or shimmy when the car is driven at speeds over 50 miles per hour and the tires on the car had been used for three to five thousand miles. (Id.)

 The plaintiffs also alleged that Mercedes concealed this defect from future and previous purchasers even after it received complaints of "uneven and or rapid tire wear on all [S-Class] models," regardless of the tire brand. (Id.) The concealment is asserted to have occurred despite internal memoranda identifying the problem as being endemic to the S-Class. (Id.) The autos weight was seen as being "a big factor." (Id.)

 Mercedes proffers that each vehicle in the S-Class differs in weight and is "equipped with [a] tire ... of varying size and rating." (Id.) Mercedes' warranty for S-Class vehicles specifically excludes the tires. (Id. at 5).

 During the alleged concealment of the defect, the plaintiff proffers that Mercedes advertised:

the new Mercedes Benz S-Class as nothing less than the car of a lifetime, with performance, comfort and safety features like no car before, and claimed that the automobiles were engineered like no other car in the world.[ ] Its safety steering system features an impact-absorbing steering wheel and that its automobiles are the most dependable in America, with manufacturing tolerances somewhat finer than the width of a human hair.


 The Proposed Settlement

 Once the class was certified, settlement discussions were commenced between the parties. Ultimately, a settlement was reached. Under the proposed settlement, Mercedes has agreed to issue certificates to each member of the class for each automobile owned. *fn2" As stated above, the class consists of people who purchased or leased a Mercedes S-Class automobile of the model years 1992 or 1993. Pursuant to the settlement, the value of the certificate varies according to the exact model and year of the car. The following chart explains how much an individual car owner is due: 1992 Model Immediate Value 300SD $ 2,400 300SE $ 2,400 400SE $ 3,000 500SEL $ 4,200 600SEL $ 5,700 1993 Model Immediate Value 300SD $ 2,400 300SE $ 2,400 400SEL $ 3,000 500SEL $ 4,200 500SEC $ 4,200 600SEL $ 5,700 600SEC $ 5,700

 A third option is available if the holder of the certificate decides not to buy or lease a new Mercedes during the four-year period, but remains in possession of the certificate. This is the cash redemption feature of the settlement agreement. Pursuant to the settlement agreement, the certificates can be redeemed for half their immediate value in cash starting three years after the settlement date. Cash redemption is available throughout the entire fourth year post-settlement.

 This agreement restricts MBCC, as a member of the class, in its use of the certificates. MBCC must use all of its certificates for the benefit of non-Mercedes affiliated customers before the certificates expire. Any certificate not used within 36 months of issuance will be transferred to charitable or educational institutions designated by the parties and approved by the Court.

 Moreover, Mercedes will be responsible for the administration of this entire program. During the four-year period, the defendant will also have to provide quarterly reports to class counsel. Moreover, all costs that result from the ...

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