Rickman v. BMW of North America LLC

          OPINION

          Kevin McNulty, U.S.D.J.

         This putative class action alleges that the diesel engines of two BMW models, the 2009-2013 BMW X5 xDrive35d (the "X5") and the 2009-2011 335d (the "335d") (together, "the Subject Vehicles"), emit nitrogen oxides ("NOx") at levels in excess of federal and state emissions standards. Plaintiffs assert that Defendants BMW of North America ("BMW USA") and Bayerische Motoren Werke Aktiengesellschaft ("BMW AG") (together, "BMW") colluded with Defendants Robert Bosch GmbH and Robert Bosch LLC (together, "Bosch") to market the cars as "clean diesel" while they knew that the Subject Vehicles discharged emissions at impermissible levels. The true level of emissions was allegedly masked during laboratory testing by deceptive technology (a "defeat device") that Defendants developed and employed. The Complaint brings counts under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, and various state consumer protection laws. Plaintiffs seek to bring these claims on behalf of themselves and a nationwide class of all persons or entities who purchased or leased the BMW models at issue. Now before the Court are motions by BMW USA (DE 29) and Robert Bosch LLC (DE 30) to dismiss the Consolidated Class Action Complaint ("the Complaint", DE 26, cited as "Comp.") pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

         There are some 42 named plaintiffs who allegedly own the X5 or 335D models. Lacking here is a straightforward allegation that an identified plaintiff bought a car which, when tested or analyzed, turned out to contain a defeat device. Rather, the Complaint alleges that one six-year-old X5 model car with 60, 000 miles on the odometer was tested. It is not alleged that this car was owned by any plaintiff; it seems to be proffered as an exemplar. That testing revealed a discrepancy between on-road and laboratory emissions levels. There seems to have been no further physical or electronic analysis attributing the discrepancy, which might have a number of explanations, to a defeat device.

         Such testing surely suffices to raise suspicions, if little more. The real weak link, however, is the suggested inference that anyone (including the 42 plaintiffs) who bought that model car unknowingly purchased a defeat device. I have examined the allegations in the context of other diesel vehicle defeat device cases in which motions to dismiss were denied. Those complaints tended to offer more corroboration, generally consisting of official findings or testing from independent sources which tended to suggest a uniform practice of installing a defeat device in a particular model.

         Here, however, the named Plaintiffs have not adequately alleged that they personally (or the putative class members) have suffered an injury in fact. For the reasons set forth below, Defendants' motions are granted and Plaintiffs' Complaint is dismissed. That dismissal is without prejudice to a properly supported motion to amend the complaint, perhaps following further scientific analysis. Before I will put this massive class action on the road, however, I will require a more careful look under the hood.

         I. BACKGROUND^[1]

         a. Procedural History

          Plaintiffs initiated this action on March 27, 2018, originally under the caption Garner Rickman v. BMW of North America, et al. (DE 1). Plaintiffs filed an amended complaint as of right on April 19, 2018, which was captioned Chad Maccanelli, et al, v. BMW of North America, et al (DE 6). On May 8, 2018, certain other plaintiffs, represented by the same counsel, filed a complaint captioned Ricky Evans, et al. v. BMW of North America LLC, et al, No. 2:18-cv-08935, which added 21 new plaintiffs but was otherwise substantially identical to the complaint in Maccanelli. On August 3, 2018, Plaintiffs consolidated the two actions through the filing of a Consolidated Class Action Complaint, which is the currently operative pleading. (DE 26). In light of the consolidation, Plaintiffs voluntarily dismissed the complaint filed in the Evans matter. (DE 28).

         On May 16, 2019, this case was reassigned from Judge Vazquez to Judge McNulty for all further proceedings. (DE 57). Presently before the Court are motions to dismiss the Consolidated Class Action Complaint by BMW USA (DE 29) and Robert Bosch LLC (DE 30).^[2] Plaintiffs filed briefs in opposition (DE 37, 39), to which Defendants replied (DE 43, 44). After briefing on the motions was complete, Plaintiffs filed notices of supplemental authority (DE 46, 49, 50), and BMW USA and Robert Bosch LLC filed responses (DE 47, 48, 51).

         b. Factual Summary^[3]

         BMW makes and sells automobiles. Bosch is alleged to have manufactured components that enabled BMW to fool regulatory tests of their cars' emissions.

         Recently, several leading auto manufacturers, most prominently Volkswagen, have been embroiled in civil and criminal proceedings involving assertions that they evaded emissions standards for their diesel vehicles. Such evasion typically included the use of a defeat device, consisting of software within a car that alters the emission control system when tested by regulators in a specific test environment. This use of a defeat device would deceptively make a car's emissions appear to be lower when tested in the lab than they would be under normal road conditions. In this way, a defeat device enables the vehicle to pass emissions tests but then reduces the effectiveness of the emissions control system during normal operation.

         Other leading diesel manufacturers have been accused of misleading regulators in this fashion. Volkswagen pled guilty to criminal violations of the Clean Air Act; Mercedes is under investigation by the U.S. Department of Justice ("DOJ"); Fiat Chrysler Automobiles ("FCA") has been subjected to civil proceedings by the Environmental Protection Agency ("EPA"). (Comp. ¶¶ 3, 9-11, 74). According to Plaintiffs, these diesel manufacturers used defeat devices made by Bosch that turn off or turn down emission controls when the vehicles electronically sense that they are not in a test environment.

         Plaintiffs assert that BMW and Bosch have similarly engaged in an unlawful scheme to evade emissions standards with a defeat device for the Subject Vehicles. Specifically, plaintiffs claim that due to the use of a defeat device the Subject Vehicles emit levels of NOx many times higher than (i) their gasoline counterparts; (ii) what a reasonable consumer would expect; (iii) what BMW has advertised; (iv) the EPA's and certain states' maximum standards; and (v) the levels necessary to obtain certificates of conformity, a prerequisite to selling motor vehicles in the United States. (Comp. ¶ 2).

         i. Parties

         BMW USA is a corporation doing business in all fifty states and the District of Columbia that is organized under the laws of Delaware with its principal place of business in New Jersey. (Comp. ¶ 61). BMW USA manufactured, sold, and warranted the Subject Vehicles throughout the United States at all relevant times to this action and installed the diesel engine systems. (Id. ¶ 62). Germany-based BMW AG, which supervised the manufacturing and advertisements of the Subject Vehicles in the United States, is the parent company of the BMW Group. (Id. ¶ 63).

         Robert Bosch LLC is organized under the laws of Delaware and has its principal place of business in Michigan. (Comp. ¶ 68). Robert Bosch GmbH is a German multinational engineering and electronics company headquartered in Germany and is the parent company of Robert Bosch LLC. (Id. ¶ 67). Plaintiffs refer to both entities jointly as "Bosch" and assert that the Bosch entities share a collective identity. (Id. ¶ 69-72, 230).

         ii. Plaintiffs' Testing and Defeat Device Allegations

          Plaintiffs claim that Bosch developed and manufactured the electronic diesel control ("EDC") that allowed BMW to implement defeat devices in the Subject Vehicles as a means of evading regulatory scrutiny. (Comp. ¶¶ 15, 64, 67, 70, 201-14). One such Bosch EDC-the EDC17-allegedly is a "perfect enabler" for the use of a defeat device because it empowers software within the car to detect whether the car is experiencing a test environment versus normal driving conditions and alters emissions output accordingly. (Id.). Almost all of the diesel vehicle manufacturers who allegedly manipulated emissions in the U.S., see supra, used a Bosch EDC 17 device. (Id.). German and U.S. prosecutors are currently investigating certain Bosch managers for their role in the emissions scandal involving Volkswagen and other manufacturers. (Id. ¶¶ 73, 74). The Complaint alleges that, since the BMW Subject Vehicles use a Bosch EDC17, as did the Volkswagen cars and other suspect diesel vehicles, "Bosch was a participant in the scheme to hide the true emissions" of the Subject Vehicles. (Id. ¶75).

         In order to be sold in the United States, a vehicle must be covered by a certificate of conformity ("COC") issued by the EPA. (Comp. ¶ 77). The COC certifies that the vehicle comports with the specific emissions standards for pollutants set forth in the Clean Air Act. (Id. ¶¶ 76-77, 85, 108). To receive a COC, a diesel vehicle must not emit more than a specific amount of both NOx, which is a byproduct of diesel combustion, and particulate matter ("PM"). (Id. ¶¶ 82-83, 85, 108).^[4] Pollution from NOx and PM has been linked with serious environmental problems and health risks. (Id. ¶¶ 6, 78, 81-83, 106, 265-67). Diesel engines have higher NOx and PM emissions than their gasoline counterparts due to differences in fuel combustion and the treatment of emissions within the engine following combustion. (Id. ¶ 84).

         A manufacturer's application for a COC must accurately describe the vehicle "in all material respects," including any auxiliary emission control device ("AECD") installed in the vehicle. (Comp." 85, 109, 209, 244). A defeat device is a type of AECD. (Id.). A manufacturer would not be able to obtain a COC if it disclosed the existence of a defeat device because defeat devices impermissibly reduce the effectiveness of an automobile's emission control system during normal driving use. (Id. ¶¶ 4, 110, 209-10).

         Here, Plaintiffs allege that BMW failed to disclose to regulators the presence of one or more defeat devices that it developed with Bosch for the two BMW diesel vehicles at issue. (Comp. ¶¶ 15, 210). As discussed below, Plaintiffs base their allegation on an inference from their own testing on one vehicle. They argue that since that one vehicle emitted suspiciously discrepant levels of emissions during road testing and lab testing, it follows that a defeat device must be present in all the Subject Vehicles.

         When regulators test emission levels in a lab, they typically do so with a device called a chassis dynamometer, which might be compared to a treadmill. (Comp. ¶¶ 116, 146, 208). A chassis dynamometer is "a Fixture that holds a car in place while allowing its driven wheels to turn with varying resistance meant to simulate the actual load on the engine during on-road driving." [Id.). The regulators then measure the emission levels at varying speeds and acceleration levels to see if the tested vehicle meets the relevant emission standards. (Id] When properly calibrated, the chassis dynamometer can simulate real world driving with a high degree of accuracy. (Id. ¶ 146).

         A separate form of testing can be done using a portable emission measurement system ("PEMS"), which measures the gaseous emissions from a vehicle, including NOx and PM. Being portable, the device can test emission levels during normal, on-road driving. (Comp. ¶ 143). The critical distinction between PEMS and chassis dynamometer testing, then, is that the PEMS can operate during normal driving, while the chassis dynamometer operates only in a simulated, laboratory setting. [Id. ¶ 143, 146).

         Previously, defeat devices circumvented regulatory scrutiny by detecting that the vehicle was on a chassis dynamometer-i.e., not actually driving on the road. (Comp. ¶^r 2, 14, 157-58). If so, the defeat device would limit the emissions output to meet regulatory standards.^[5] If not-e.g., when the vehicle was driven on the road under normal conditions-the emission levels would not be limited, allowing the car to have better fuel economy and superior driving performance. (Id.).

         Prior to the revelations of the Volkswagen scandal in 2015, regulators did not perform PEMS testing for the relevant diesel vehicles, but instead relied on chassis dynamometer testing to certify regulatory compliance. (Comp. ¶ 146). Volkswagen's manipulation of chassis dynamometer results came to light when a group of university scientists working with a nonprofit organization performed PEMS testing on Volkswagen diesel cars. They noticed that Volkswagen emissions levels, as revealed by PEMS testing, did not meet regulatory standards, and they reported their findings to regulators. (Id. ¶ 144).

         An emissions test cycle defines a protocol that specifies certain criteria under which an engine is tested, including lab temperature, vehicle conditions, and varying sample speeds. (Comp. ¶ 115). The test cycle defines the vehicle speed and time intervals at which the vehicle runs at a certain speed. The object is to simulate a typical driving scenario and provide a uniform protocol for testing purposes. [Id.). The protocol that the EPA uses for emission certification and fuel economy testing of passenger vehicles is called the FTP-75 (Federal Test Procedure) cycle. (Id.).

         The FTP-75 is the primary dynamometer cycle used to certify light and medium duty passenger cars and trucks. (Comp. ¶ 117). This cycle incorporates rapid changes in speed and acceleration meant to reflect city driving (i.e., frequent stops), along with some steadier, higher speed sections meant to account for highway driving. (Id. ¶¶ 115, 117). Regulators measure emissions during the test cycle and compare those levels to an emissions standard that defines the maximum pollutant levels that can be released during such a predefined cycle. (Id. ¶ 116).

         The FTP-75 comprises three separate phases. (Comp. ¶ 177). It begins with a "cold start" phase ("Phase 1"), meaning that the vehicle starts the test cycle with the engine having been off for at least eight hours. (Id. ¶¶ 118, 178). The "cold start" portion of the FTP-75 test is challenging for diesel engines employing selective catalytic reduction technology because catalysts meant to control emissions are not yet at temperatures where they work effectively. (Id.). The second phase ("Phase 2") starts immediately after Phase 1 and is a stabilized phase. (Id. ¶¶ 179-80, 185). The third phase ("Phase 3") is a "hot" phase; it occurs after the vehicle is turned off for ten minutes following Phase 2. (Id. ¶¶ 179-80, 185). Regulators test emission levels during each of the three phases of the FTP-75 test cycle. (Id. ¶ 181).

         The plaintiffs here performed emissions testing on one model year 2012 X5 (the "Tested Vehicle").^[6] The tests encompassed both PEMS and chassis dynamometer testing meant to replicate the FTP-75 test cycle. (Comp. ¶ 141). The Tested Vehicle had around 60, 000 miles on it at the time of Plaintiffs' testing. (Id.). Plaintiffs inspected the Tested Vehicle to ensure that it had no engine faults, that regular maintenance had been performed, that the vehicle had not been in an accident, and that the emission control components were functioning properly. (Id. ¶ 141).

         Plaintiffs assert that the Tested Vehicle is "representative of the entire population" of the Subject Vehicles, including all X5 vehicles for the years 2009 through 2013 and all 335d vehicles for the years 2009 through 2011. (Comp. ¶¶ 141, 161). Plaintiffs contend that it was not necessary to separately test an exemplar of the 335d model, because the "engine architecture is nearly identical for both the X5 and 335d with the only difference being that the X5 employs both high- and low- pressure [exhaust gas recirculation ("EGR")] because of its higher weight, while the 335d uses high pressure EGR only." (Id. ¶¶ 91, 100, 161).

         Otherwise, all other aspects of the engine are "nearly identical." (Id. ¶¶ 91, 100, 161). Furthermore, "all other model years [subsequent to 2009] are identical to the 2009 [X5] model year from an emissions standpoint" and BMW "did not change the engine in any significant way with respect to diesel emissions in these models." (Id. ¶¶ 161-62).

         Plaintiffs evaluated the emission levels of the Tested Vehicle using a chassis dynamometer in a way intended to replicate the FTP-75 test cycle. (Comp. ¶¶ 177-89). For Phase 2, Plaintiffs' testing found that the composite emission levels of the Tested Vehicle on the chassis dynamometer was "quite close to the standard." (Id. ¶¶ 186-88). In other words, the Tested Vehicle "appears to be working as designed on the chassis dynamometer" during Phase 2. (Id. ¶ 189).

         Not so the PEMS testing. Plaintiffs' PEMS testing, which was intended to "closely approximate" the FTP-75 certification test cycle, revealed that the Tested Vehicle had emissions levels that were higher than regulatory standards. (Comp. ¶¶ 163-76). According to Plaintiffs, over the course of 2, 401 miles of testing on flat road highway driving, the Tested Vehicle released emissions above the "emission standard" for 82% of the miles it travelled. (Id. ¶¶ 163-66).

         Based on Plaintiffs' PEMS testing, the emission levels of the Tested Vehicle for flat road testing increased when the ambient temperature was outside of the dynamometer test lab temperature range, which is between 68^CF and 86°F. (Id. ¶¶ 167-71). When the Tested Vehicle was near 72°F, which is within the certification test window, the emissions met the regulatory standard. (Id. ¶ 167). However, when tested between 50°F and 60°F, which is below the certification temperature window, the emissions "increased dramatically." (Id. ¶ 168). The implication is that the Defendants intentionally designed the emission controls to game the ambient temperature parameters. (Id. ¶¶ 169-71).

         For Plaintiffs' PEMS highway testing on hills, emission levels increased as the road grade, or incline, increased. (Id. ¶¶ 172-73). The implication here is that emission controls are "de-rated (turned down or off) on hills." (Id. ¶ 173). During PEMS "stop and go testing," Plaintiffs' found emissions to be on ...