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Class Action Certified Against Mercedes-Benz Over Emergency-Response System
The case consolidates 10 suits filed in six states
New Jersey Law Journal
April 28, 2009
A federal judge in Newark, N.J., has certified a class action alleging that Mercedes-Benz sold cars equipped with an emergency-response system that the company knew would soon become obsolete.
Senior District Judge Dickinson Debevoise ruled the plaintiffs suffered an ascertainable loss because they bought vehicles designed to last 20 or more years, while the emergency system became useless after 2007.
"[A] class action will be the most efficient method for adjudicating plaintiffs' claims," Debevoise said Friday, finding the claims met the class action criteria of Federal Rule of Civil Procedure 23(a): numerosity, commonality, typicality and adequacy of representation.
The case, In Re: Mercedes-Benz Tele-Aid Contract Litigation, MDL 1914, consolidates 10 suits filed in six states against Mercedes-Benz U.S.A. of Montvale, N.J.. Debevoise estimated the class at more than 100,000 members.
The plaintiffs assert violations of the New Jersey Consumer Fraud Act and a cause of action for unjust enrichment.
They claim that Mercedes made statements or omissions of material facts that it knew or should have known were false or misleading when promoting vehicles equipped with "Tele Aid," an emergency response system that linked subscribers to roadside assistance operators through global positioning and cellular technology through AT&T Wireless Services Inc., for a subscription fee.
The system ran on analog signals, not digital, and Mercedes-Benz continued to sell vehicles so equipped from 2002 to 2007 even though it knew as early as August 2002 that a change in Federal Communications Commission regulations would allow AT&T to discontinue its analog cellular service in 2008, rendering the system inoperative, the plaintiffs allege.
Mercedes-Benz placed a notice about discontinuation of the analog Tele Aid service on its Web site in November 2006. But many car owners did not learn about the change until AT&T sent them letters upon the expiration of their subscriptions in 2007.
The class certified by Debevoise consists of two groups of owners who bought a Mercedes-Benz after Aug. 8, 2002: consumers who paid to have their car retrofitted to accommodate a digital version of Tele Aid and those who paid subscription fees for the analog service until it ended in 2007.
Compensatory damages for consumers whose cars were retrofitted would come to about $1,000 per vehicle, says lead plaintiffs counsel Jonathan Selbin of Lieff, Cabraser, Heimann & Bernstein in New York.
Compensatory damages would be somewhat more for consumers who paid subscription fees until 2007; they would receive $1,000 for retrofitting as well as compensation for the period they went without Tele Aid service, Selbin says.
Mercedes-Benz argued against class certification, asserting each plaintiff's claim should be governed by the law of his or her state. Debevoise disagreed, finding New Jersey law should apply.
On the consumer fraud claim, he concluded that New Jersey's interests outweighed those of New York and California after applying the "government interest" test that those states mandate in conflict-of-law analysis. Besides the interest in compensating class members from the state, New Jersey has the additional interest in regulating a company whose acts in question occurred within its borders, Debevoise said, noting that New Jersey was the place where the alleged misrepresentations were made.
As for unjust enrichment, Debevoise found no material conflict between New Jersey law and that of other states where suits originated: New York, California, Illinois, Missouri and Washington. Applying the "most significant relationship" test used by Illinois, Missouri and Washington, Debevoise found a clear-cut case for application of New Jersey law.
A spokeswoman for Mercedes Benz U.S.A., Donna Boland, says the ruling is inconsistent with laws of New Jersey and other states and the company plans to appeal. Boland adds that the form that buyers signed when they subscribed to AT&T service said on the reverse side that continued operation of Tele Aid was contingent on availability of analog cellular service.
The lawyer for Mercedes-Benz, Thomas Curtin of Graham Curtin in Morristown, N.J., was out of his office Monday and did not return a message.
