Envtl. Prot. Comm'n of Hillsborough Cnty. v. Mercedes-Benz U.S. LLC

• Decision Date: 18 April 2022
• Docket Number: 8:20-cv-2238-VMC-JSS
• Parties: ENVIRONMENTAL PROTECTION COMMISSION OF HILLSBOROUGH COUNTY, FLORIDA, Plaintiff, v. MERCEDES-BENZ USA, LLC, DAIMLER AKTIENGESELLSCHAFT, ROBERT BOSCH, LLC, and ROBERT BOSCH GMBH, Defendants.
• Court: U.S. District Court — Middle District of Florida

ENVIRONMENTAL PROTECTION COMMISSION OF HILLSBOROUGH COUNTY, FLORIDA, Plaintiff, v. MERCEDES-BENZ USA, LLC, DAIMLER AKTIENGESELLSCHAFT, ROBERT BOSCH, LLC, and ROBERT BOSCH GMBH, Defendants.

No. 8:20-cv-2238-VMC-JSS

United States District Court, M.D. Florida, Tampa Division

April 18, 2022

ORDER

VIRGINIA M. HERNANDEZ COVINGTON, UNITED STATES DISTRICT JUDGE.

This matter is before the Court on consideration of Defendants Daimler Aktiengesellschaft and Mercedes-Benz USA, LLC's (“the Mercedes Defendants'”) Motion to Dismiss Plaintiff's Third Amended Complaint (Doc. # 122) filed on January 20, 2022. Plaintiff Environmental Protection Commission of Hillsborough County, Florida responded on February 10, 2022. (Doc. # 135). The Mercedes Defendants replied on March 4, 2022. (Doc. # 144). The Motion is granted to the extent set forth herein.

I. Background

The Commission, a unit of Hillsborough County's government responsible for providing and maintaining standards of atmospheric purity, initiated this action on September 24, 2020. (Doc. # 1). The Commission then filed a third amended complaint on December 16, 2021, seeking monetary penalties and injunctive relief for violations of the Commission's anti-tampering ordinance, EPC Rule Chapter 1-8, “Mobile Source.” (Doc. # 116).

According to the third amended complaint, all Defendants engaged in a conspiracy to create and install “defeat device” software in new Mercedes diesel vehicles to reduce the effectiveness of the vehicles' emission control systems when not in an emissions-testing environment. (Id. at 1-4).

The Commission's claims are not, however, based on the creation of these defeat devices and their installation in new Mercedes vehicles pre-sale. Rather, the Commission “is only asserting claims relating to post-sale activities of the Defendants.” (Id. at 4). Specifically, the Commission bases its claim in part on “every post-sale update that does not remove the workaround” - the defeat device - from the relevant Mercedes vehicles. (Id. at 29).

The Defendants also allegedly “violated EPC Rule Section 1-8.05(1) . . . by tampering with the emission control systems of Affected Vehicles registered in Hillsborough County, and manufacturing and installing post-sale software updates in Affected Vehicles registered in Hillsborough County.” (Id. at 44). “Because Mercedes represents and maintains that their engines require steady service to remain operative, numerous post-sale updates to the emissions control systems, created through collaboration amongst all of the Defendants, have been implemented and installed throughout the United States, Florida, and Hillsborough County.” (Id. at 27-28). “It is industry standard for manufacturers, including Mercedes, to make such post-sale software updates available to their dealerships via web-based computer programs.” (Id. at 28). Mercedes allegedly “sometimes issue[s] such post-sale software changes via over-the-air updates.” (Id.).

Additionally, the Commission also alleges that the “Defendants' conduct in tampering post-sale with the emission control systems of Affected Vehicles registered in Hillsborough County, through a program of newly created field fixes and recall campaigns, violates EPC Rule Chapter 1-8.” (Id. at 44-45).

The Mercedes Defendants now seek dismissal of the claims against them based on preemption, failure to state a claim, and other arguments. (Doc. # 122). The Motion is fully briefed (Doc. ## 135, 144), and ripe for review.

II. Legal Standard

On a motion to dismiss pursuant to Rule 12(b)(6), this Court accepts as true all the allegations in the complaint and construes them in the light most favorable to the plaintiff. Jackson v. Bellsouth Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further, the Court favors the plaintiff with all reasonable inferences from the allegations in the complaint. Stephens v. Dep't of Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir. 1990). But,

[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Courts are not “bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). The Court must limit its consideration to well-pleaded factual allegations, documents central to or referenced in the complaint, and matters judicially noticed. La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

Additionally, “[a] plaintiff is ‘not required to negate an affirmative defense in [its] complaint.' Thus, ‘[g]enerally, the existence of an affirmative defense will not support a motion to dismiss.'” Twin City Fire Ins. Co. v. Hartman, Simons & Wood, LLP, 609 Fed.Appx. 972, 976 (11th Cir. 2015) (citations omitted).

III. Analysis

The Mercedes Defendants raise multiple arguments for dismissal. The Court addresses them in turn.

A. Preemption

First, the Mercedes Defendants argue that the Commission's claims are preempted by the Clean Air Act (“CAA”).

The Court rejects this argument and, instead, follows the reasoning of the Ninth Circuit in In re Volkswagen “Clean Diesel” Mktg., Sales Pracs., & Prod. Liab. Litig., 959 F.3d 1201 (9th Cir. 2020), cert. denied sub nom. Volkswagen Grp. of Am., Inc. v. Env't Prot. Comm'n of Hillsborough Cnty., 142 S.Ct. 521 (2021) - another emissions case brought by the Commission and other county governments. The Ninth Circuit held that the CAA neither expressly nor impliedly preempts claims related to post-sale tampering with emission control systems. Id.; see also State ex rel. Yost v. Volkswagen Aktiengesellschaft, 165 Ohio St.3d 213, 218 (Ohio 2021) (holding that the post-sale anti-tampering provision of Ohio's Air Pollution Control Act was neither expressly nor impliedly preempted by the Clean Air Act), cert. denied sub nom. Volkswagen Aktiengesellschaft v. Ohio, 142 S.Ct. 515 (2021).

1. Express Preemption

The CAA “expressly preempts certain state and local laws regulating emissions from new motor vehicles.” In re Volkswagen “Clean Diesel” Mktg., Sales Pracs., & Prod. Liab. Litig., 959 F.3d at 1215. Section 209(a) of the CAA provides:

No State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines subject to this part. No State shall require certification, inspection, or any other approval relating to the control of emissions from any new motor vehicle or new motor vehicle engine as condition precedent to the initial retail sale, titling (if any), or registration of such motor vehicle, motor vehicle engine, or equipment.

42 U.S.C. § 7543(a) . “A ‘new motor vehicle' is ‘a motor vehicle the equitable or legal title to which has never been transferred to an ultimate purchaser,' § 7550(3), in other words, a pre-sale vehicle.” In re Volkswagen “Clean Diesel” Mktg., Sales Pracs., & Prod. Liab. Litig., 959 F.3d at 1215. “In light of this definition, [Section] 209(a) precludes state or local governments from imposing any restriction that has the purpose of enforcing emission characteristics for pre-sale, motor vehicles.” Id. at 1216. “After a new motor vehicle is sold ‘to an ultimate purchaser,' 42 U.S.C. § 7550(3), the express preemption clause no longer applies. Instead, the CAA preserves state and local governments' authority over post-sale motor vehicles.” Id. at 1216.

The Ninth Circuit rejected Volkswagen's argument that the Commission's rules, including the same EPC Rule Section 1-8.05(1) at issue here, were preempted as applied to postsale vehicles:

We turn to Volkswagen's argument that [Section] 209(a) also expressly preempts the Counties' antitampering rules as applied to post-sale vehicles. It clearly does not. By its terms, [Section] 209(a) preempts state and local regulations “relating to the control of emissions from new motor vehicles.” 42 U.S.C. § 7543(a) (emphasis added). The provision does not apply to post-sale vehicles.

Id. at 1218. For the same reason, the Court holds that express preemption does not apply to the Commission's claims here, which are based on alleged post-sale tampering in the form of software updates, field fixes, and recalls.

This is true even though the Commission bases its postsale tampering claim in part on what the Mercedes Defendants' dub the “inaction theory” of tampering, under which the Commission argues that post-sale software updates constituted tampering because they failed to remove the original defeat device. The Court does not agree that this inaction theory would require car manufacturers to alter their design or manufacture of new vehicles before sale. Because even under the inaction theory the Commission bases its claims on tampering with post-sale vehicles, the claims are not expressly preempted.

2. Implied Preemption

“The Supreme Court has articulated two circumstances - referred to as ‘field preemption' and ‘conflict preemption' - where Congress's implicit intent to preempt state law clears [the high threshold to find implied preemption]. First, ‘when federal law occupies a “field” of regulation “so comprehensively that it has left no room for supplementary state legislation ”' a court may infer that Congress intended to preempt state law.” Id. at 1212 (citations omitted). “Second, when a state law ‘actually conflicts with federal law,' either because ‘compliance with both...