Counts v. Gen. Motors, LLC

• Citation: 606 F.Supp.3d 678
• Decision Date: 09 June 2022
• Docket Number: Case No. 1:16-cv-12541
• Parties: Jason COUNTS et al., Plaintiffs, v. GENERAL MOTORS, LLC and Robert Bosch LLC, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

606 F.Supp.3d 678

Jason COUNTS et al., Plaintiffs,

v.GENERAL MOTORS, LLC and Robert Bosch LLC, Defendants.

Case No. 1:16-cv-12541

United States District Court, E.D. Michigan, Northern Division.

Signed June 9, 2022

Caroline F. Bartlett, James E. Cecchi, Carella, Byrne, Cecchi, Olstein, Brody and Agnello, Roseland, NJ, Christopher A. Seeger, Jennifer R. Scullion, Seeger Weiss LLP, Ridgefield Park, NJ, Garth D. Wojtanowicz, Steve W. Berman, Jessica M. Thompson, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Scott A. George, Seeger Weiss LLP, Philadelphia, PA, Jason J. Thompson, Sommers Schwartz, P.C., Southfield, MI, for Plaintiffs Jason Counts, Donald Klein, Oscar Zamora, Brandon Stone, Jason Silveus, John Miskelly, Thomas Hayduk, Joshua Hurst, Joshua Rodriguez.

Caroline F. Bartlett, James E. Cecchi, Carella, Byrne, Cecchi, Olstein, Brody and Agnello, Roseland, NJ, Christopher A. Seeger, Jennifer R. Scullion, Seeger Weiss LLP, Ridgefield Park, NJ, Garth D. Wojtanowicz, Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiffs Bassam Hirmiz, Christopher Hemberger, Derek Long.

Haley Lorraine Darling, Kirkland and Ellis, LLP, Washington, DC, Kathleen T. Sooy, Rebecca Baden Chaney, April N. Ross, Corwell & Moring LLP, Washington, DC, Faraz Shahidpour, Heather Bartels, Jeffrey S. Bramson, Katherine W. Warner, Renee D. Smith, Richard C. Godfrey, Leslie M. Smith, Kirkland & Ellis LLP, Chicago, IL, Michael P. Cooney, Dykema Gossett, Detroit, MI, for Defendant General Motors, LLC.

Abena Ayowa Mainoo, Carmine D. Boccuzzi, Jr., Cleary Gottlieb steen & Hamilton LLP, New York, NY, Jonathan E. Lauderbach, Warner Norcross & Judd, LLP, Midland, MI, Matthew D. Slater, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC, Michael G. Brady, Warner Norcross & Judd LLP, Detroit, MI, William R. Jansen, Warner Norcross Judd, Detroit, MI, for Defendant Robert Bosch LLC.

OPINION AND ORDER VACATING SHOW-CAUSE ORDER, GRANTING AND DENYING IN PART DEFENDANT GM'S MOTION FOR SUMMARY JUDGMENT, AND GRANTING AND DENYING IN PART DEFENDANT BOSCH'S MOTION FOR SUMMARY JUDGMENT

THOMAS L. LUDINGTON, United States District Judge

Plaintiffs are purchasers of a diesel-powered version of the 2014 or 2015 Chevrolet Cruze who allege that Defendants General Motors and its software developer Robert Bosch committed mail and wire fraud in developing and installing features that misrepresent the diesel Cruzes’ exhaust emissions. By concealing certain "defeat devices," Plaintiffs explain, Defendants deceived them and numerous other consumers into buying a diesel Cruze, which they ostensibly thought would be more environmentally friendly. Plaintiffs seek the amount that they overpaid for their defective diesel Cruzes, calculated by three complex yet reliable economic theories.

Plaintiffs’ federal claim is founded on the Racketeer Influenced and Corrupt Organizations ("RICO") Act. Under the RICO Act, indirect purchasers cannot sue upstream sellers. Because Plaintiffs did not purchase their diesel Cruzes directly from GM or Bosch, the RICO claim will be dismissed.

Plaintiffs also sue for deception, fraud, unfair competition, or some variation of thereof under 60 state laws. Five of Plaintiffs’ state claims will also be dismissed, and two state claims will be dismissed as to only Defendant Bosch.

I.

A.

On June 7, 2016, nine consumers ("Plaintiffs") filed a 442-page complaint alleging that GM intentionally or recklessly equipped and sold the 2014 and 2015 diesel Chevrolet Cruze "with an emissions system that turned off or limited its emissions reduction system during normal driving conditions." ECF No. 1 at PageID.18. Plaintiffs added that each consumer "suffered an ascertainable loss as a result of GM's omissions and/or misrepresentations associated with the [diesel] Cruze's Clean Diesel engine system, including but not limited to, out-of-pocket loss and future attempted repairs, future additional fuel costs, decreased performance of the vehicle, and diminished value of the vehicle." Id. at PageID.19.

In addition to fraudulent concealment and false advertising, Plaintiffs alleged that Defendants breached contracts with the consumers. Counts v. Gen. Motors LLC , No. 1:16-CV-12541, 2021 WL 8014317, at *7 (E.D. Mich. Sept. 1, 2021).

In October 2016, GM filed a motion to dismiss the Complaint for lack of jurisdiction and failure to state a claim. ECF No. 12. On February 14, 2017, this Court granted in part GM's Motion to Dismiss, ECF No. 21, finding that:

• Plaintiffs conceded their breach of contract claims and consensually dismissed all state law breach of contract claims. ECF No. 21 at PageID.782.

• Plaintiffs plausibly alleged an economic injury (overpayment) that was "fairly traceable" to GM and sufficient to withstand GM's facial challenge to Plaintiffs’ standing under Article III. See ECF No. 21 at PageID.766 ("If the system did not actually provide any value to the vehicle, then Plaintiffs suffered financial injury through overpayment regardless of whether they relied on GM's alleged misrepresentation.").

• Given the Complaint's allegations, Plaintiffs’ case was not preempted by § 209 of the Clean Air Act, 42 U.S.C. § 7401 et seq. ECF No. 21 at PageID.778–79 ("Because those factual allegations must be accepted as true when considering a motion to dismiss, there is no functional difference between the EPA finding of noncompliance and an allegation of noncompliance. Rather, the gravamen of Plaintiffs’ claims, as in Volkswagen, focus on the deceit about compliance, rather than the need to enforce compliance." (internal quotation marks omitted)).

• Plaintiffs could not rely on GM advertisements touting the "cleanliness" and "high-quality" of the vehicles to plead fraud because such statements amounted to "nonactionable puffery." See ECF No. 21 at PageID.790 ("In their Compliant, Plaintiffs include the advertisements on which they base their claims. Plaintiffs[ ] cite GM's representations about the ‘high-quality’ and ‘safety’ of its vehicles. Those assertions are inherently subjective and cannot form the basis of a fraud action.").

• Plaintiffs plausibly alleged fraudulent concealment to the extent they alleged that GM concealed the "defeat device" from purchasers. See ECF No. 21 at PageID.793–94 ("If Plaintiffs’ allegations are true, GM installed a ‘defeat device’ on the Cruze. The only plausible purpose of such a device is to create the appearance of low emissions without the reality of low emissions. If GM were not attempting to deceive regarding the level of emissions produced by the Cruze, the alleged ‘defeat device’ would not exist.").

Counts , 2021 WL 8014317, at *7. In sum, Plaintiffs plausibly established their Article III standing and pleaded a cognizable overpayment injury stemming from Defendants’ fraudulent concealment of three purported defeat devices.

Plaintiffs then amended their Complaint to include Robert Bosch LLC and Robert Bosch GmbH (collectively, "Bosch"): German companies that supplied GM with the diesel Cruze's emissions software. Plaintiffs also added a RICO claim against all three Defendants. ECF Nos. 94; 95. Plaintiffs later voluntarily dismissed Bosch GmbH, leaving only GM and Robert Bosch LLC as Defendants. See ECF No. 317.

Defendant Bosch then filed a motion to dismiss the First Amended Complaint for lack of jurisdiction and failure to state a claim. ECF No. 108. GM concurred with Bosch's Motion. ECF No. 109. Addressing Bosch's Motion to Dismiss, this Court concluded that Plaintiffs pleaded a cognizable RICO claim against Defendant Bosch under 18 U.S.C. § 1961, because "the allegations concerning regulatory violations are collateral allegations which are unnecessary to sustain Plaintiffs’ RICO claim." ECF No. 122 at PageID.8311.¹

Plaintiffs filed a motion to exclude Defendants’ experts, ECF No. 337 (filed under seal), and GM filed an omnibus motion to exclude Plaintiffs’ experts, ECF No. 344. Plaintiffs’ Motion was granted in part and denied in part, and GM's Motion was denied. ECF No. 438.

GM and Bosch also filed motions for summary judgment, which are the focus of this Opinion and Order. ECF Nos. 338; 339 (filed under seal); 345 (filed under seal); 346. Defendants later added a motion to strike Plaintiffs’ expert reports and response briefing to Defendants’ motions for summary judgment. ECF No. 397. Defendants’ Motion to Strike was denied in the last Order. ECF No. 438.

B.

After discovery ended, this Court noticed stark contrasts between Plaintiffs’ allegations and the evidence produced during discovery. Given the disparities, the question presented was whether Plaintiffs have Article III standing and, by extension, whether this Court has jurisdiction. Several concerns were evident.

First, though this case had existed for nearly six years, neither the EPA nor CARB had issued violation notices or investigated the diesel Cruze—despite communicating with Defendants, Plaintiffs, and Plaintiffs’ experts. Counts v. Gen. Motors LLC , No. 1:16-CV-12541, 2021 WL 8014317, at *13 (E.D. Mich. Sept. 1, 2021). For example, GM had at least three meetings with officials from the EPA and CARB to discuss the statistics from this case and the supplemental testing that GM conducted in 2016. ECF Nos. 345-14 (filed under seal); 345-15 (filed under seal); 345-16 (filed under seal). Moreover, in June 2019, GM filed a Freedom of Information Act ("FOIA") request seeking all communication, concerning the 2014 and 2015 diesel Cruze, between CARB and the EPA and: (1) Plaintiffs and Defendants’ law firms, (2) the West Virginia University researchers, and (3) people affiliated with Juston Smithers. See ECF Nos. 345-19 (filed under seal); 345-20 (filed under seal). But neither the parties’ communications with the EPA or CARB nor GM's FOIA request have produced any evidence that the EPA or CARB are investigating GM or Bosch for misrepresenting the operation of the diesel Cruze.

Second, Plaintiffs’ only evidence of excessive emissions was the testimony of two expert...