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Regina Feldman and Lynn Deutsch v. Mercedes-Benz Usa

December 18, 2012

REGINA FELDMAN AND LYNN DEUTSCH, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
MERCEDES-BENZ USA, LLC, AND DAIMLER, AG, DEFENDANTS.



The opinion of the court was delivered by: William J. Martini, U.S.D.J.:

OPINION

Plaintiffs Regina Feldman ("Feldman") and Lynn Deutsch ("Deutsch") filed this putative class action against Defendants Mercedes-Benz USA, LLC ("MBUSA") and Daimler, AG ("Daimler") (collectively "Defendants"). This matter comes before the Court on motions to dismiss filed by both Defendants, and Defendants' request to strike the class allegations from the Amended Complaint. There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, MBUSA's motion to dismiss is GRANTED in part, and DENIED in part; Daimler's motion to dismiss is GRANTED in part, and DENIED in part; and Defendants' request to strike Plaintiffs' class allegations is DENIED.

I.BACKGROUND

This products liability action was filed by Plaintiffs on behalf of themselves, a putative nationwide class, and a California subclass comprised of current and former Mercedes-Benz vehicle owners and lessees of the following Mercedes vehicle models: 2007-2011 GL Class vehicles, 2006-2011 ML Class vehicles, and 2006-2011 R Class vehicles ("Class Vehicles"). First Amended Complaint ("Amended Complaint" or "FAC") ¶ 1, ECF No. 20. Defendant MBUSA is a corporation organized and existing under the laws of the State of New Jersey with its principal place of business at Montvale, New Jersey. FAC ¶ 39. MBUSA is a wholly-owned subsidiary of Defendant Daimler. Id. Daimler is a German corporation headquartered in Stuttgart, Germany. Id.

¶ 40. Daimler designs and manufactures the Class Vehicles, while MBUSA distributes, services, and warrants them in the United States. Id. ¶¶ 42-43.

A.THE ALLEGED AIR INTAKE SYSTEM DEFECT

The gravamen of Plaintiffs' Amended Complaint is that the Class Vehicles were equipped with a defective Air Intake System ("AIS"). The AIS provides fresh air from outside the vehicle to be used by the climate control system. Id. ¶ 2. Plaintiffs allege that the AIS in the Class Vehicles is defective because it fails to prevent leaves, twigs, and other objects from entering the AIS, causing it to clog. Id. The AIS contains a "closed-end" drain valve made of a rubber-like material at the bottom of the AIS. Id. The material and the shape of the drain valve allegedly cause organic debris to be trapped and clog the valve. Id. As a result, during rain or when the vehicle is washed, water builds up in the AIS and enters the Class Vehicles' climate control system and vehicle interior, resulting in substantial electrical failure and damaging to the interior components of the Class Vehicles. These alleged defects are referred to herein as "the AIS Defect."

Plaintiffs allege that the AIS Defect presents a safety hazard and is unreasonably dangerous to consumers because of the danger of catastrophic engine and/or electrical system failure while the vehicle is in operation. Id. ¶ 3. Plaintiffs assert that flooding can cause sudden engine failure at any time and under any driving conditions or speeds, including highway speeds, thereby contributing to traffic accidents. Id.

Plaintiffs allege that, since late 2005, if not before, Defendants knew the Class Vehicles and their AIS were defectively manufactured and/or designed, not fit for their intended purposes, and were an unreasonably dangerous safety risk. Id. ¶ 4. Plaintiffs allege that Defendants actively concealed and failed to disclose this defect to Plaintiffs and prospective Class Members at the time of purchase, lease, repair or thereafter. Id. In January 2006, MBUSA issued a Dealer Technical Bulletin ("DTB") to its dealers, stating:

If you receive customer reports in the above model vehicles of tree debris collecting in the cowl area or water ingress into the interior of the vehicle due to the climate unit overflowing, the drain valve in the bottom of the climate control system air intake should be removed. In heavy rain, the water in the air intake housing may not drain due to the drain valve being blocked with debris. This is more common with vehicles that are parked under trees which shed more leaves, needles etc.

Id. ¶ 6. The DTB instructed the dealer to modify the AIS by "remov[ing] the drain valve (star-shaped grommet) from the bottom of the climate unit" ("AIS modification"). Id. ¶

7. The DTB further states, "[t]he allowable labor operations should be used when submitting a warranty claim for this repair," and the DTB provides a damage code for use "[i]n [c]ase of [w]arranty." Id.

Plaintiffs allege that Defendants failed to notify owners and lessees of the 2006-2008 Class Vehicles, in maintenance booklets or otherwise, that they had an independent duty to inspect and clean the AIS. Id. ¶¶ 32-35. Starting in 2009, MBUSA included in its maintenance schedule for the 2009-2011 Class Vehicles the requirement that they undergo service to "clean water drain in air/water duct" at every "20,000 miles or 2 years." Id. However, MBUSA failed to provide the same notice to the owners and lessees of 2006-2008 Class Vehicles, which contain the same parts. Id.

Plaintiffs allege that because of Defendants' concealment of the AIS Defect and refusal to cover the AIS modification under warranty, Plaintiffs incurred substantial economic damages.

B.PLAINTIFF FELDMAN

On November 13, 2008, Plaintiff Regina Feldman purchased a Certified Pre-Owned 2006 Mercedes-Benz R350 from an authorized Mercedes-Benz dealer, Keyes European, in Van Nuys, California. Id. ¶ 20. At the time of purchase the vehicle was covered under the Certified Pre-Owned 100,000-mile express warranty ("CPO Warranty"). Id. On or about December 23, 2010, when her vehicle had approximately 46,000 miles on the odometer, the AIS clogged and water flooded into the interior portion of the vehicle, causing substantial damage to the climate control system, the electrical system, and the carpeting. Id. ¶ 21. Feldman discovered the damage when she attempted to use her vehicle and it would not start. Id. ¶ 22. She jump started her flooded vehicle and drove it to Keyes European for evaluation. Id. Keyes European confirmed her vehicle had the AIS Defect and that it sustained water ingress damage to numerous components, including parts in the electrical system and climate control system, and advised Feldman that the damage was not covered under the terms of her CPO Warranty. Id. Feldman was further advised to contact her insurance company and request that the carrier pay for the repairs under her comprehensive and collision insurance coverage. Id.

Feldman submitted the matter to her insurance company. Id. ¶ 23. A January 2, 2011 repair estimate showed $17,061.76 worth of damage as a result of the flooding, and Feldman's insurance company determined that the damage to the vehicle represented a total loss. Id. As a result, the insurance company paid Feldman the fair market value of the vehicle, less a $500.00 insurance deductible. Id.

C.PLAINTIFF DEUTSCH

On January 9, 2010, Plaintiff Lynn Deutsch purchased a used 2007 Mercedes-Benz R350 from a dealer in California with approximately 20,396 miles on its odometer. Id. ¶ 25. On or about November 26, 2010, while her vehicle was covered under the New Vehicle Limited Warranty ("NVLW"), Deutsch noticed it would not start. Id. ¶ 26. In response, Deutsch jump started the vehicle and brought it to an authorized Mercedes-Benz dealer, Autobahn Motors in Belmont, California. Id. Deutsch was advised that her vehicle's AIS drain was clogged with organic debris, which resulted in water backing up into the AIS and overflowing into the interior of the vehicle. Id.

Deutsch's vehicle sustained significant damage, including but not limited to damage to the interior, electrical system, and climate control system. Id. ¶ 27. As a result of the damage, it was no longer possible to safely operate the vehicle without it undergoing extensive repairs. Despite the fact that Deutsch's vehicle was still covered under the NVLW, she was advised the repairs would not be covered because the water leak was an "outside influence" not covered under MBUSA's 4-year/50,000-mile express warranty. Id. ¶ 28. Accordingly, she was provided an estimate of $2,280 to repair the damage, including the AIS modification that MBUSA had outlined in its DTB. Id.

Deutsch requested that MBUSA repair the damage to her vehicle under the NVLW. Id. ¶ 29. In response, MBUSA refused to cover the repair under the NVLW, but offered to provide Deutsch with a "one time goodwill repair to insure client satisfaction" and to charge her only for the parts and not for the labor to perform the repairs. Id. ¶ 31. Because Deutsch needed the vehicle repaired, she accepted the offer and paid about $1,033.00 for the repairs. Id. The dealer also refused to pay for Deutsch's rental car fees while her vehicle was out of service for approximately 20 days. Id.

II.LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).

Although a complaint need not contain detailed factual allegations, "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, such that it is "plausible on its face." See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement' . . . it asks for more than a sheer possibility." Iqbal, 129 S.Ct. at 1949 (2009).

Pursuant to Federal Rule of Civil Procedure 9(b), a plaintiff alleging fraud must state the circumstances of the alleged fraud with sufficient particularity to place the defendant on notice of the "precise misconduct with which [it is] charged." Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007)(quoting Lum v. Bank of America, 361 F.3d 217, 223-224 (3d Cir.2004)) (internal quotation marks omitted). To satisfy this standard, the plaintiff must plead or allege the date, time and place of the alleged fraud or otherwise inject precision or some measure of substantiation into a fraud allegation. Id.

III.DISCUSSION

Plaintiffs assert ten causes of action in their Amended Complaint:

(1) Count I: Violation of the New Jersey Consumer Fraud Act ("NJCFA");

(2) Count II: Breach of Express Warranty;

(3) Count III: Breach of the Implied Warranty of Merchantability;

(4) Count IV: Common Law Fraud;

(5) Count V: Breach of the Duty of Good Faith and Fair Dealing;

(6) Count VI: Unjust Enrichment;

(7) Count VII: Violation of California Consumer Legal Remedies Act ("CLRA");

(8) Count VIII: Violation of California Secret Warranty Law ("SWL");

(9) Count IX: Violation of California Unfair Competition ...


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