Seifi v. Mercedes-Benz USA, LLC
| Decision Date | 23 May 2013 |
| Docket Number | NO. C12-5493 TEH,C12-5493 TEH |
| Parties | MAJEED SEIFI AND TRACEY DEAKIN, Plaintiffs, v. MERCEDES-BENZ USA, LLC, Defendant. |
| Court | U.S. District Court — Northern District of California |
ORDER GRANTING IN PART
AND DENYING IN PART
MOTION TO DISMISS AND
DENYING MOTION TO STRIKE
CLASS ALLEGATIONS
This matter is before the Court on a Motion to Dismiss and a Motion to Strike Class Allegations filed by Defendant Mercedes-Benz, USA, LLC ("MBUSA"). Having carefully considered the parties' papers and their oral arguments at the May 20, 2013, motion hearing, the Court GRANTS IN PART and DENIES IN PART MBUSA's Motion to Dismiss and DENIES MBUSA's Motion to Strike Class Allegations.
BACKGROUND
In this suit brought under the Class Action Fairness Act, 28 U.S.C. § 1332(d), Plaintiffs Majeed Seifi and Tracy Deakin ("Plaintiffs") assert claims on behalf of themselves and a proposed class of "owners and lessees within California of Mercedes vehicles equipped with either the M272 or the M273 engines" bearing certain serial numbers. Compl. ¶¶ 34 (Docket No. 1). Plaintiffs allege that these engines contain gears made of sintered steel alloy that wear out prematurely, causing their engines to misfire, which poses a safety concern and necessitates major repairs.
The facts, taken from the complaint, attached documents, and documents submitted by MBUSA in connection with its request for judicial notice and its challenge to this Court's jurisdiction, are as follows:1
Seifi is the owner of a 2006 Mercedes ML-350 SUV equipped with a M272 engine. Seifi is the third owner of the vehicle, which he bought on March 17, 2012, with 63,838 miles on it. The first owner of Seifi's SUV purchased it on March 27, 2006. When Seifi's SUV had approximately 70,000 miles on it, the check engine light went on. Seifi promptly brought the vehicle to a dealership, which informed him that the vehicle had a defective balance shaft gear and the balance shaft needed replacing at a cost of approximately $6,000. The dealership told Seifi that the defective balance shaft gear could cause the engine to misfire and the vehicle to stall without warning. Seifi complained that he had not been told about the defect when he purchased the SUV, and that he did not believe that a car with such low milage and manufactured so recently should require such a major repair. The dealership responded that Seifi's vehicle was no longer covered by warranty and advised him to contact MBUSA, which he did to no avail. Concerned about the safety of his vehicle, Seifi paid to have the repair done.
A similar defect in the M272 engine of Deakin's ML-350 SUV required a repair costing almost $7000. Deakin purchased his vehicle new from a dealership on December 26, 2005. In or around April 2012, when his SUV had about 100,000 miles on it, Deakin's check engine light came on and the engine began to misfire without warning. The dealership told Deakin that the problem was a defective balance shaft gear, and to replace the gear, the mechanic would have to partially disassemble the engine. Deakin complained that such arecent model of engine should not malfunction and demanded compensation or redress. In response, the dealership and MBUSA informed him that his vehicle was out of warranty. While repairing Deakin's SUV, the mechanic discovered metal pieces from the balance shaft gear throughout the engine.
Plaintiffs allege that MBUSA knew about the defects in the balance shaft gears in Mercedes M272 engines and the idle gears in M273 engines and concealed the information from Deakin, Seifi, and the members of the putative class. According to Plaintiffs, the defects are present in engines manufactured beginning in 2004. Plaintiffs allege that MBUSA's parent company knew that manufacturing gears with sintered steel could result in premature failure, secretly tracked the prevalence of the problems caused by the gear defects, and based on the data gleaned from these tracking efforts, switched from sintered steel alloy to conventional steel construction of the gears in September 2006. They also allege that Mercedes's diagnostic manuals alerted technicians to balance shaft gear problems in vehicles equipped with M272 engines prior to mid-2007, when Mercedes issued its first of a series of Technical Service Bulletins to its technicians informing them about the defective gears and instructing them on how to make appropriate repairs.
Plaintiffs further allege that MBUSA made misrepresentations about the reliability of Mercedes vehicles with M272 and M273 engines. Specifically, Plaintiffs point to: 1) an undated MSN Autos review reporting that "Mercedes has had quality issues in the past few years, but feels confident that the new design of the solid-feeling M-class should be free of problems"; and 2) a November 20, 2006, CNN money report stating that a Mercedes representative said that the low reliability ratings given to 2006 Mercedes vehicles by Consumer Reports were "totally out of sync with what we're seeing in the mainstream research as well as our own customer satisfaction and warranty data." Compl. ¶ 30-33.
Plaintiffs' complaint sets out claims for breach of express warranty under California law, breach of implied warranty under the Song-Beverly Consumer Warranty Act, section 1790 et seq. of the California Civil Code (the "Song-Beverly Act"), and violations of the California Consumers Legal Remedies Act ("CLRA"), section 1750 et seq. of the CaliforniaCivil Code, and California's Unfair Competition Law ("UCL"), section 17200 et seq. of the California Business and Professions Code. MBUSA now moves the Court to 1) dismiss each of Plaintiffs' claims; and 2) strike their class allegations.
MOTION TO DISMISS
MBUSA moves to dismiss Plaintiffs' complaint under Federal Rules of Civil Procedure 12(b)(1), for lack of standing, and 12(b)(6), for failure to state a claim. Generally, a complaint must contain "a short and plain statement" showing "the grounds for the court's jurisdiction" and "that the pleader is entitled to relief." Fed. R. Civ. P. 8(a). Claims based on allegations of fraud are subject to a heightened pleading standard: they must be pled "with particularity." Fed. R. Civ. P. 9(b).
A complaint may be dismissed under Rule 12(b)(1) if the plaintiffs do not carry their burden to allege facts which, if proved, would confer standing on them. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1140 (9th Cir. 2003). A party moving to dismiss a claim under Rule 12(b)(1) for lack of standing may make a factual challenge by presenting affidavits and other admissible evidence in support of the motion. Savage, 343 F.3d at 1040 n.2. The party opposing the motion may then present its own affidavits and evidence in support of its claim to standing. Id.
Dismissal is appropriate under Rule 12(b)(6) when a complaint fails "to state a claim upon which relief can be granted." A claim will survive a motion to dismiss if the complaint's "non-conclusory factual content, and reasonable inferences from that content" plausibly suggest that the plaintiff is entitled to the requested relief. Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662 (2009)) (internal quotation marks omitted).
In ruling on a motion to dismiss, a court must "accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party." Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007). However, "to be entitled to thepresumption of truth, allegations in a complaint . . . may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Additionally, "the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Id.
Unless amendment would be futile, leave to amend should be freely granted. Fed. R. Civ. P. 15(a)(2).
MBUSA moves to dismiss Plaintiffs' claims based on its express warranty and on the Song-Beverly Act's implied warranty of merchantability, arguing that Plaintiffs lack standing and have failed to state a claim because MBUSA was not legally obligated to repair their vehicles free of charge. Because MBUSA's challenge to Plaintiffs' standing is based on the legal merits of their warranty claims, the Court will address both grounds for dismissal together.
Plaintiffs claim that MBUSA breached its express warranty by "failing to correct, at no charge to class members, the subject defect." Compl. at ¶ 48. It is undisputed that the vehicles at issue in this case were covered by MBUSA's factory warranty for 2006 Trucks, which provides, in relevant part:
Ex. E to Yoshino Dec. (Document No. 13).
It is undisputed that both Seifi's and Deakin's SUVs were over 48 months old and had been driven over 50,000 miles when the gear defect caused the engine problems that necessitated the repairs for which they seek compensation. Plaintiffs argue that MBUSA's warranty does not require the discovery of a defect during the warranty period, so long as the defect is present during the warranty period. As a general rule, express warranties do not...
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