Sadeghi-A v. Daimler Trucks N. Am. LLC

• Decision Date: 08 March 2021
• Docket Number: Case No. 19-cv-2373 (MJD/ECW)
• Parties: Ardalan Sadeghi-A, Plaintiff, v. Daimler Trucks North America LLC and Freightliner Custom Chassis Corporation, Defendants.
• Court: U.S. District Court — District of Minnesota

Ardalan Sadeghi-A, Plaintiff, v. Daimler Trucks North America LLC and Freightliner Custom Chassis Corporation, Defendants.

Case No. 19-cv-2373 (MJD/ECW)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

March 8, 2021

ORDER

This matter is before the Court on Plaintiff Ardalan Sadeghi-A's ("Sadeghi-A" or "Plaintiff") Amended Motion for Leave to Amend Complaint (Dkt. 34) ("Motion to Amend").¹ For the reasons below, the Court grants the Motion to Amend.

I. BACKGROUND

A. Operative Complaint

This action was removed to U.S. District Court for the District of Minnesota on August 28, 2019. (Dkt. 1.) Sadeghi-A alleges, in part, the following in the operative Complaint. (See Dkt. 1-1.)

Sadeghi-A purchased a Newmar² London Aire recreational vehicle motorhome (the "Motorcoach" or "Motorhome") on August 1, 2016 from Steinbring Motorcoach Inc. in Minnesota. (Dkt. 1-1 ¶¶ 1, 5.) Defendant Daimler Trucks North America LLC ("Daimler") and Defendant Freightliner Customer Chassis Corporation ("Freightliner") (collectively, "Defendants") manufacture and sell motor home chassis to customers and dealers, which are an integrated part of motor homes sold to customers. (Id. ¶¶ 2-3.) "Defendants designed, manufactured and warranted the chassis and related components of the Motorcoach, including specification and installation of the axle structures," and a manufacturer's express written warranty issued by Defendants was included in Sadeghi-A's purchase of the Motorcoach. (Id. ¶¶ 6-7.) "Since April 2015, Defendants have been aware of problems with design, manufacturing and/or installation of the tag axle on many of the chassis used for recreational vehicles and buses as it issued a service bulletin that Newmar described as applicable to a tag axle alignment concern for which it would assist customers in resolving the issue with Freightliner."³ (Id. ¶ 7.) "Defendants did not disclose the [tag axle] issue or the service bulletin to Plaintiff." (Id.)

The Complaint further alleges that the Motorcoach "has been the subject of several problems covered by warranty," and "[t]he problems . . . substantially, individually and together, impaired and continue to impair the value and use of the Motorcoach." (Id. ¶ 8.) The problems include "intermittent and unpredictable significant pulling to the left which increases the safety risk at higher rates of speed and is unrepairable by alignments; excessive vibration; [and] premature, uneven and unsafe tire wear." (Id.) Sadeghi-A "reported the defects and nonconformities and presented the Motorcoach to Defendants, its agents and authorized dealerships and repair facilities on many" occasions from August 2016 to March 2019. (Id. ¶ 9.) "The defects and warranty nonconformities . . . have not been corrected and remain a substantial impairment." (Id.) "Defendants['] repeated approach . . . has been to treat the problem as a need for an alignment and perform an alignment in an attempt to 'force' the Motorcoach to drive straight," but "[t]his has not been and cannot be successful in repairing the Motorcoach because the defective condition is a design, manufacturing and installation flaw that caused" problems that persist "regardless of how many times or how aggressively an alignment tries to overcompensate for such defective underlying conditions." (Id. ¶ 10.)

"At the time Plaintiff purchased the Motorcoach, Defendants were aware of the axle-related defects or with proper diligence should have been aware of the axle-related defects affecting the Motorcoach and did not disclose these true facts to Plaintiff, instead representing that the Motorcoach was free of defects and would drive true and proper." (Id. ¶ 12.) "Each time Defendants and their authorized service representatives represented that the Motorcoach needed an alignment as referenced in paragraph nine [inthe Complaint], they knew or with reasonable diligence should have known the true nature of the axle problems but failed to disclose and concealed the true nature of the problem." (Id. ¶ 13.)

Sadeghi-A "relied upon the concealment [of the axle-related defects] in purchasing the Motorcoach" and "would not have purchased the Motorcoach or would have purchased a motorhome with a different manufacturer's chassis" "[i]f Defendants had disclosed the axle-related defects." (Id. ¶ 12.) He also "relied upon Defendants' misrepresentations in accepting their repeated false attempts to repair and continuing to maintain ownership in an attempt to resolve the problem with Defendants." (Id. ¶ 13.)

Based on the allegations in the Complaint—which have not been recounted here in their entirety—Sadeghi-A asserted five counts: (1) Violation of Minnesota Lemon Law, Minn. Stat. § 325F.665; (2) Violation of Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq.; (3) Breach of Express Warranty, based on the express written warranty provided by Defendants; (4) Violations of Minn. Stat. § 325G.17-.20, which are Minnesota's statutes applicable to consumer warranties; and (5) Violations of Minn. Stat. § 325F.69, Minnesota's Consumer Fraud Act. (Id. ¶¶ 17-46.) Sadeghi-A requested relief of "(A) Awarding Plaintiffs damages for the violation of Minnesota law; (B) Granting injunctive relief to prohibit any conduct that violates Minnesota's Consumer Fraud Act; [and] (C) Awarding Plaintiff his attorneys' fees and costs." (Id. at 18-19.)⁴

Defendants filed an Answer to the Complaint on August 30, 2019. (Dkt. 7.)

B. Proposed Amended Complaint

Sadeghi-A moved to amend the Complaint on September 18, 2020. (Dkt. 34.) The parties submitted memoranda (Dkts. 35, 40), and the Court held oral argument on October 1, 2020 (Dkt. 41). After the hearing, on October 8, 2020, Sadeghi-A filed a letter "submit[ting] . . . authorities limited to questions [the Court] raised at the motion hearing." (Dkt. 42 at 1.)

The changes in the Proposed Amended Complaint generally add factual allegations regarding Defendants' development and testing of the type of tag axle that was incorporated into Sadeghi-A's Motorcoach and Defendants' knowledge of and lack of disclosure regarding defects in the tag axle, as well as several new counts. (See generally Dkt. 34-2 (redlined Proposed Amended Complaint).) According to Sadeghi-A, the new allegations are based on documents produced and deposition testimony, in mid-August 2020 and on September 10, 2020, respectively, by third-party Hendrickson USA, LLC, which designed and supplied the tag axle to Defendants. (Dkt. 34-1 ¶¶ 9, 42-43; Dkt. 35 at 1, 4.) Sadeghi-A alleges, in part, the following in the Proposed Amended Complaint. (See generally Dkt. 34-1.)

1. Defendants' Development of and Knowledge of Defects in the USB Tag Axle

The tag axle at issue in this case is "a passive steer tag axle" and "was given the brand name 'Ultra-Steer B Series' or 'USB.'" (Id. ¶¶ 7-8.) The USB tag axle was in development as of 2014 and tested through at least January 2015. (See id. ¶¶ 9-11.) In December 2014, "before testing was even complete on the prototype USB tag axle, an article was published in RV Pro magazine," in which Freightliner representatives"emphasized the features of the USB tag axle" and made certain representations about the performance of the USB tag axle. (Id. ¶ 10; see id. at 48-53, Ex. D (RV Pro article).) According to the Proposed Amended Complaint, Freightliner also posted a video to YouTube at the same time "in which it makes false representations" about the USB tag axle's performance. (Id. ¶ 10.)

"During testing of the USB tag axle on the only test vehicle on which it was installed, in January of 2015, a control arm fastener bolt broke. Numerous other instances during testing revealed malfunction of the mechanism that allows the wheels to turn or holds them straight." (Id. ¶ 11.)⁵

"Defendants' production of the USB tag axles on recreational vehicle chassis commenced in April of 2015. After that time and before August of 2015, reports were received by Hendrickson that it raised upon inquiry to Defendants about the USB tag axles being off-center." (Id. ¶ 12.) "Third-party subpoenaed documents and publicly available documents show a substantial volume of complaints after the USB tag axle went into production and continues through the present time frame." (Id.; see also id. ¶ 22 ("Before and after August of 2016, Defendants have received but withheld from disclosure in this lawsuit, customer complaints, warranty claims and out-of-warranty 'goodwill' claims related to the USB tag axle defects causing the drivability problems.").) Sadeghi-A identifies early August 2015 as the time when Defendants, along withHendrickson, "first became aware of the design mechanical basis for the problem causing customer complaints":

The reports caused Defendants and Hendrickson in early August 2015, to analyze the USB tag axle to determine what was causing the drivability problems. Defendants discovered that a lateral shifting of the USB tag axle that was not part of the design and was causing the USB tag axle to shift off-center was the anomaly that was the starting point for the problem.

(Id. ¶ 13.)

Further, by August 2015, Defendants were aware of the following:

Defendants were aware that the USB tag axle design and its manufacturing process was causing USB tag axles to be installed on chassis off-center . . . . When a post-manufacturing, pre-delivery alignment was performed on chassis with an off-center USB tag axle, the alignment results could show as within the range of acceptable tolerance when in fact it was not . . . thereby causing chassis to be delivered to endstage builders out of alignment, unable to hold alignment and/or with false alignment readings.

(Id. ¶ 14.)

In addition to being delivered out of alignment, Defendants knew that "the USB tag axle defects [] could not be remedied but had to be redesigned and replaced." (Id. ¶ 28; see also id. ¶ 27 (Defendants "knew that the defect could not be repaired since it was being redesigned and replaced.").) With regard to Sadeghi-A's...