Duramax Diesel Litig. Andrei Fenner v. Gen. Motors, LLC

• Decision Date: 20 February 2018
• Docket Number: Case No. 17–cv–11661
• Parties: IN RE DURAMAX DIESEL LITIGATION Andrei Fenner, et al, Plaintiffs, v. General Motors, LLC, Robert Bosch GmbH, and Robert Bosch LLC, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

298 F.Supp.3d 1037

IN RE DURAMAX DIESEL LITIGATIONAndrei Fenner, et al, Plaintiffs,

v.General Motors, LLC, Robert Bosch GmbH, and Robert Bosch LLC, Defendants.

Case No. 17–cv–11661

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

Signed February 20, 2018

ORDER DENYING MOTIONS TO DISMISS AND DENYING MOTIONS FOR LEAVE TO FILE SURREPLIES AS MOOT

THOMAS L. LUDINGTON, United States District Judge

On May 25, 2017, the original Plaintiffs (including the first-named Plaintiff Andrei Fenner) filed a complaint against Defendant General Motors LLC ("GM"), Robert Bosch GmbH, and Robert Bosch LLC ("Bosch" and, collectively, the "Defendants"). ECF No. 1. The suit was assigned to United States District Judge George Caram Steeh. On July 25, 2017, Judge Steeh issued a stipulated proposed order which consolidated the Fenner class action with another class action (Carrie Mizell et al. v. General Motors LLC, et al., Case No. 17–11984) also pending before him at the time. ECF No. 16. Pursuant to that stipulated proposed order, the "caption for the Consolidated Action" was designated as "IN RE DURAMAX DIESEL LITIGATION." Id. at 3. Also pursuant to that stipulated order, the Plaintiffs filed a consolidated amended complaint on August 4, 2017. ECF No. 18. On August 30, 2017, the consolidated case was reassigned because it is a companion case to Counts et al. v. General Motors , Case No. 1–16–cv–12541, which is currently in discovery. ECF No. 33.

At the deadline for responsive pleadings, Defendants filed two motions to dismiss the consolidated amended complaint. ECF Nos. 44, 45.¹ Defendants advance many arguments, including that the Plaintiffs lack standing to sue, that Plaintiffs have failed to state a claim for affirmative misrepresentation, that any fraudulent concealment or omission claims should be dismissed or stayed, and that Plaintiffs have failed to state a Racketeering Influenced and Corrupt Organizations Act (RICO) claim, 18 U.S.C. § 1961 et seq. For the following reasons, the motions to dismiss will be denied.

I.

All well-pleaded factual allegations are assumed to be true at the pleading stage. The consolidated amended complaint names thirteen Plaintiffs residing in ten states.² Each Plaintiff bought a Silverado or Sierra 2500 or 3500 diesel vehicle with a model year between 2011 and 2016. Con. Am. Compl. at 1, ECF No. 18. Some Plaintiffs bought new vehicles and others bought used vehicles, but each purchased their vehicle from an authorized GM dealer. See, e.g. , id. at 14. The vehicles which Plaintiffs identify all contain a "Duramax

" diesel engine. Id. at 1. Plaintiffs' allegations center on the emissions reduction technology associated with that engine.

A.

According to Plaintiffs, GM represented the Duramax

engine as providing both low emissions and high performance. Id.³ Plaintiffs (in unsourced quotations) contend that GM boasted that the Duramax engine constituted a " ‘remarkable reduction of diesel emissions’ " compared to the engine previously used in its Silverado and Sierra vehicles. Id. Those representations were false. Plaintiffs allege that

scientifically valid emissions testing has revealed that the Silverado and Sierra 2500 and 3500 models emit levels of NOx many times higher than (i) their gasoline counterparts, (ii) what a reasonable consumer would expect, (iii) what GM had advertised, (iv) the Environmental Protection Agency's maximum standards, and (v) the levels set for the vehicles to obtain a certificate of compliance that allows them to be sold in the United States.

Id.⁴

In other words, the Duramax

engine does not actually combine high power and low emissions as GM suggested: "[T]he vehicles' promised power, fuel economy, and efficiency is obtained only by turning off or turning down emissions controls when the software in these vehicles senses they are not in an emissions testing environment." Id. at 1–2.

The Duramax

engine allegedly achieves this feat by employing "defeat devices." Id. at 2. As Plaintiffs define that term, "[a] defeat device means an auxiliary emissions control device that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use." Id. The Duramax engine allegedly contains three such devices. Defeat Device No. 1 "reduces or derates the emissions system when temperatures are above the emissions certification test range (86°F)." Id. at 3. Similarly, Defeat Device No. 2 "operates to reduce emissions control when temperatures are below the emissions certification low temperature range (68°F)." Id. The impact of these alleged devices is significant:

Testing reveals that at temperatures below 68°F (the lower limit of the certification test temperature), stop and go emissions are 2.1 times the emissions standard at 428 mg/mile (the standard is 200 mg/mile). At temperatures above 86°F, stop and go emissions are an average of 2.4 times the standard with some emissions as high as 5.8 times the standard.

Id.

The third defeat device "reduces the level of emissions controls after 200–500 seconds of steady speed operation in all temperature windows, causing emissions to increase on average of a factor of 4.5." Id. Plaintiffs estimate that "due to just the temperature-triggered defeat devices, the vehicles operate at 65–70% of their miles driven with emissions that are 2.1 to 5.8 times the standard." Id.⁵

Plaintiffs provide a technical explanation for how GM was able to leverage these devices to "obtain and market higher power and fuel efficiency from its engines while still passing the cold-start emissions certification tests." Id. at 4. Essentially, GM placed the "Selective Analytic Reduction (SCR) in front of the Diesel Particulate Filter (DPF)."⁶ Id. In doing so, GM increased the engine's power production and fuel efficiency. However, placing the SCR in front of the DPF also dramatically increased potential emissions, thus requiring the engine to "employ Active Regeneration (burning off collected soot at a high temperature) and other power- and efficiency-sapping exhaust treatment measures." Id. Thus, the power and fuel-efficiency gains were lost because of the increased need for emissions reduction technology. GM's solution, according to the Plaintiffs, was the three defeat devices identified above.

B.

1.

Plaintiffs allege that, in developing this solution, "GM did not act alone." Id. at 10. Rather, Robert Bosch GmbH and Robert Bosch LLC "were active and knowing participants in the scheme to evade U.S. emissions requirements" and to develop, manufacture, and test the "electronic diesel control (EDC) that allowed GM to implement the defeat device." Id. The EDC in question, Bosch's EDC17, "is a good enabler for manufacturers to employ ‘defeat devices’ as it enables the software to detect conditions when emissions controls can be derated—i.e. , conditions outside of the emissions test cycle." Id. Importantly, "[a]lmost all of the vehicles found or alleged to have been manipulating emissions in the United States (Mercedes, FCA, Volkswagen, Audi, Porsche, Chevy Cruze) use a Bosch EDC17 device." Id.

According to a Bosch press release quoted by Plaintiffs, the EDC17 device controls " ‘the precise timing and quantity of injection, exhaust gas recirculation, and manifold pressure regulation.’ " Id. at 93. The device also " ‘offers a large number of options such as the control of particulate filters or systems for reducing nitrogen oxides.’ " Id. EDC17 is "run on complex, highly proprietary engine management software over which Bosch exerts near-total control." Id. at 94. Because the software "is typically locked to prevent customers, like GM, from making significant changes on their own," vehicle manufacturers must work closely with Bosch to implement EDC17 in a vehicle. Id.

According to Plaintiffs, "Bosch participated not just in the development of the defeat device, but also in the scheme to prevent U.S. regulators from uncovering the device's true functionality." Id. at 39. Additionally, "Bosch GmbH and Bosch LLC marketed ‘clean diesel’ in the United States and lobbied U.S. regulators to approve ‘clean diesel,’ another highly unusual activity for a mere supplier." Id. In short, Plaintiffs believe that "Bosch was a knowing and active participant in a massive, decade-long conspiracy with Volkswagen, Audi, Mercedes, GM, and others to defraud U.S. consumers, regulators, and diesel car purchasers or lessees." Id. at 40.

2.

In their complaint, Plaintiffs repeatedly reference allegedly similar conduct by other automobile manufacturers. Plaintiffs explain that, in recent years, "almost all of the major automobile manufacturers rushed to develop ‘clean diesel’ and promoted new diesel vehicles as environmentally friendly and clean." Id. at 5. Due in part to that marketing, a significant market for "clean diesel" vehicles developed: "[O]ver a million diesel vehicles were purchased between 2007 and 2016 in the United States and over ten million in Europe." Id. at 6. A number of those diesel vehicle manufacturers, however, have now been accused of installing "defeat devices" in their diesel vehicles. Id. For example, Volkswagen has pleaded guilty to criminal charges (and has settled civil class action claims) arising out of allegations that it purposefully evaded emission standards. Id. Fiat Chrysler Automobiles has also been accused of similar conduct. On January 12, 2017, the EPA "issued a Notice of Violation to FCA because it had cheated on its emissions certificates with respect to its Dodge Ram and Jeep Grand Cherokee vehicles, and on May 23, 2017, the United States filed a civil suit in the Eastern District of Michigan alleging violations of the Clean Air Act." Id. at 6–7.

C.

Unlike gasoline engines, diesel engines "compress a mist of liquid fuel and air to very high temperatures and pressures, which causes the diesel to spontaneously combust." Id. at 46. When compared to gasoline engines, diesel engines...