A federal putative class action against Mercedes-Benz over allegedly defective air-intake systems will go forward, having survived a motion to dismiss.
U.S. District Judge William Martini on Tuesday upheld four causes of action against Daimler and its Montvale-based U.S. subsidiary, whose concealment of the defect allegedly led to engine failure and other expensive problems.
The plaintiffs adequately alleged that the “defect is a safety issue,” Martini said in Feldman v. Mercedes-Benz USA, 11-cv-984. “It is not implausible that the issues that caused [one plaintiff's] vehicle to be totaled could give rise to safety concerns,” he wrote. “Courts considering similar allegations have reached the same conclusion.”
The suit was filed by two California owners. One says her vehicle incurred about $17,000 in damage and thus was totaled. The other says Mercedes refused to cover $2,280 in damage, though the vehicle was still under warranty. Her dealership discounted the repair, but it still cost her $1,000, plus 20 days of rental car expenses, she claims.
Martini let stand claims lodged under the California Unfair Competition Law and California Consumer Legal Remedies Act as well as counts of common law fraud and breach of express warranty.
At issue is an air-intake system — a box under the hood on the passenger side that draws outside air for use in the climate-control system — which includes a drain valve that inadvertently catches leaves, twigs and other debris.
As the drain clogs, rainwater and moisture from other sources, such as washing, builds up and typically overflows into the climate-control system, damaging the vehicle’s computer, electrical system, carpet and other components, the plaintiffs claim. The flooding can also cause unexpected engine failure, which poses a safety risk, they add.
The system is in place in several SUVs and crossovers: model year 2007 to 2011 GL Class vehicles, and 2006 to 2011 ML Class and R Class vehicles.
The plaintiffs say Mercedes knew of the defect years ago — pointing to a January 2006 bulletin instructing dealers confronted with the problem to modify the system by removing the drain valve — but failed to inform owners.
The plaintiffs seek nationwide class certification for owners and lessees of the vehicles in question. They also seek certification of a California subclass.
Martini rejected the plaintiffs’ request to apply New Jersey law to the claims asserted on behalf of the putative nationwide class, instead applying California law to all the claims, as Mercedes urged.
California law applies to the fraud-based claims because the plaintiffs and the vehicles are in that state, and the plaintiffs received and relied upon Mercedes’ alleged misrepresentations there, Martini said. He cited a long line of cases in the circuit holding consumers’ home-state laws applicable where the only relationship to New Jersey is the defendant’s headquarters.
The “question here is not whether New Jersey has any interest in this matter at all; it is whether New Jersey has the most significant relationship with this dispute,” Martini wrote, adding, “it does not.”
California law is applicable to the contract-based claims, too, because the place of negotiation was California, Martini said.
Martini dismissed with prejudice a count under the New Jersey Consumer Fraud Act, based on applicability of California law. He also dismissed with prejudice a count of unjust enrichment.
He dismissed without prejudice a count of violation of the California Secret Warranty Law, because the plaintiffs failed to allege a contractual relationship, and counts of breach of implied warranty of merchantability and of the duty of good faith and fair dealing.
The judge denied as premature Mercedes’ motion to strike the class allegations.
The plaintiffs’ counsel, Matthew Mendelsohn of Mazie Slater Katz & Freeman in Roseland, says they will file a new complaint and replead the counts dismissed without prejudice, proceed with discovery and eventually file a motion for class certification.
“We think it’s a positive decision overall,” Mendelsohn says. “We still think we have a very good case and we look forward to proving it.”
Lead defense counsel Michael McDonald, of Gibbons in Newark, did not respond to a reporter’s call and e-mail Wednesday.
Mercedes spokeswoman Donna Boland said in a statement that the court “dismissed many of plaintiffs’ claims on the pleadings, even when accepting all of their allegations as true. We will continue to vigorously defend against the remaining claims, as we believe they are without merit as well. We stand behind the quality of our products.”