Counts v. Gen. Motors, LLC

237 F.Supp.3d 572

Jason COUNTS, et al, Plaintiff,

v.GENERAL MOTORS, LLC, Defendants.

Case No. 16–cv–12541

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

Signed February 14, 2017

Scott A. George, Seeger Weiss LLP, Philadelphia, PA, Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Jason J. Thompson, Sommers Schwartz, P.C., Southfield, MI, for Plaintiff.

April N. Ross, Kathleen T. Sooy, Rebecca Baden Chaney, Corwell & Moring LLP, Washington, DC, Christopher V. Burtley, Michael P. Cooney, Dykema Gossett PLLC, Detroit, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART DEFENDANT'S MOTION TO DISMISS

THOMAS L. LUDINGTON, United States District Judge

On June 7, 2016, nine plaintiffs filed a 442–page complaint alleging deceptive advertising, breach of contract, and fraudulent concealment claims under the laws of thirty states against Defendant General Motors ("GM"). ECF No. 1. Fundamentally, Plaintiffs allege that GM installed a "defeat device" in the 2014 Chevrolet Cruze Diesel which results in significantly higher emissions when the vehicle is in use compared to when it is being tested in laboratory conditions. Plaintiffs purport to bring suit on behalf of a putative class of other 2014 Chevrolet Cruze Diesel buyers. On October 3, 2016, Defendant filed a motion to dismiss which argues that Plaintiff's suit should be dismissed because Plaintiffs lack standing to bring suit, the claims are preempted by the Clean Air Act, the primary jurisdiction doctrine mandates deference to an EPA investigation of the claims, and Plaintiffs have failed to state a claim upon which relief can be based. ECF No. 12. For the reasons stated below, that motion will be granted in part.

I.

When considering a motion to dismiss, the plaintiff's adequately pleaded factual allegations must be accepted as true. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). That is, the veracity of the factual allegations in Plaintiffs' Complaint is to be assumed.

A.

Plaintiffs' complaint names nine plaintiffs: Jason Counts, Donald Klein, Oscar Zamora, Brandon Stone, Jason Silveus, John Miskelly, Thomas Hayduk, Joshua Hurst, and Joshua Rodriguez. Compl. at ¶ 20–44, ECF No. 1. The complaint alleges that each Plaintiff is similarly situated. All bought a Chevrolet Cruze¹ which was allegedly equipped with a "defeat device" that resulted in significantly increased emissions when tested during normal driving as compared to when tested in laboratory settings. Plaintiffs further allege that they purchased the vehicle on the "reasonable, but mistaken, belief that [the] vehicle was a ‘clean diesel’ as compared to gasoline vehicles, complied with United States emissions standards, and would retain all of its operating characteristics throughout its useful life, including high fuel economy." See id. at ¶¶ 20, 23, 26, 27, 30, 33, 36, 39, 42. Further, Plaintiffs allege that they "selected and ultimately purchased [their] vehicles[s], in part, because of the Clean Diesel system, as represented through the advertisements and representations made by GM." Id. Finally, Plaintiffs allege that if GM had disclosed the true details of the clean diesel system design or indicated that the 2014 Chevrolet Cruze actually "emitted pollutants at a much higher level than gasoline vehicles do," they "would not have purchased the vehicle, or would have paid less for it."Id.

Defendant General Motors designs, markets, manufactures, and distributes automobiles, including those marketed under the Chevrolet brand, worldwide. Id. at 46. GM designed and manufactured the 2014 Chevrolet Cruze Diesel. Id. GM also developed and disseminated the advertising campaign for the vehicle. Id.

B.

According to Plaintiffs, diesel engines offer increased torque, low-end power, drivability, and fuel efficiency compared to gasoline engines. Id. at ¶ 4. However, those advantages are offset by the dirtier, more harmful, emissions which diesel engines produce. Id. Specifically, diesel combustion creates oxides of nitrogen (NOx), a "toxic pollutant" that "contributes to nitrogen dioxide, particulate matter in the air" and certain health problems. Id. at ¶ 54. Generally speaking, the "greater the power and fuel efficiency" of the diesel engine, "the dirtier and more harmful the emissions." Id. at ¶ 54.

Because of the pollutants produced by diesel combustion, the Environmental Protection Agency has promulgated regulatory standards (pursuant to the Clean Air Act) which govern, among other things, the amount of NOx that diesel engine vehicles can produce. Id. at ¶ 56. GM, and other vehicle manufacturers, must obtain certifications that a new vehicle complies with EPA (and certain state) regulations before introducing the vehicle into the stream of commerce. Id.

When it designed the 2014 Chevrolet Cruze Diesel, GM sought to feature all the advantages of diesel engines while minimizing the emission of harmful pollutants. Id. at ¶¶ 60–62. By creating the "Cruze Clean Turbo Diesel" engine, GM apparently built a powerful, efficient, diesel engine that was environmentally-friendly. Id. Plaintiffs allege that GM marketed the 2014 Chevrolet Cruze as a "Clean Diesel" vehicle that was "environmentally friendly and fuel efficient." Id. at ¶ 63. In their complaint, Plaintiffs include several images that GM disseminated during the advertising campaign. See id. at ¶¶ 65–68. Those images include the words "clean diesel," indicate that the "Clean Turbo Diesel" engine "improves performance while decreasing emissions," and state that "[a]dvanced emissions-scrubbing technologies make today's diesels run clean." Id. In one especially relevant image, GM advertised that "[t]he turbocharged engine in Cruze Clean Turbo Diesel [sic] generates at least 90% less nitrogen oxide and particulate emissions when compared to previous-generation diesels." Id. at ¶ 68. Plaintiffs also cite numerous advertisements and public statements promulgated by GM which assert GM's commitment to high quality standards and environmental responsibility. Id. at ¶¶ 69–72.

C.

All parties agree that GM received a certification of compliance with the relevant regulations from the EPA prior to releasing the 2014 Chevrolet Cruze Diesel. However, Plaintiffs allege that, despite that certification and GM's "clean diesel" advertising campaign, the 2014 Chevrolet Cruze Diesel was equipped with a "defeat device" which triggered the Cruze Clean Turbo Diesel functions when the vehicle was being tested, but deactivated the system when the vehicle was actually in use. Id. at ¶¶ 73–75.

Specifically, Plaintiffs allege that multiple reports and tests indicate that GM vehicles equipped with "clean diesel" systems "emit far more pollution on the road than in lab tests." Id. at ¶ 73. In one alleged study that was conducted by "TNO" at the direction of the Dutch Ministry of Infrastructure, real-world testing indicated that the "GM Opel emits NOx at levels much higher than in controlled dynamometer tests and much higher than the ‘Euro 6 Standard,’ which is less stringent than the U.S. standard." Id. at ¶ 74. The TNO study, which was released in May 2015, found that "on average [the GM Opel] vehicles were at eight times the [European] limit." Id. at ¶ 75. Although the study involved European vehicles, Plaintiffs allege that the "core technologies of the Opel design are substantially similar to the Chevy Cruze." Id. In one particularly relevant portion of the TNO report that Plaintiffs quote, TNO states: " ‘In most circumstances arising in normal situations on the road, the systems scarcely succeed in any effective reduction of NOx emissions.’ " Id. at ¶ 79.

Plaintiffs also allege that the British Department of Transportation released a study in April 2016 which reached similar conclusions. Id. at ¶ 80. This study stated that "[r]eal world emissions of [GM's Opel] vehicles were found to be approximately 750 mg/km and 400 mg/km for the Insignia and Mokka, respectively. These emissions are well above the Euro 6 standard of 80 mg/km." Id. A study conducted by the French Ministry of the Environment arrived at similar conclusions. Id. at ¶ 81. Likewise, Emissions Analytics, an U.K. company which has conducted testing on many European vehicles, found that the large disparity between real world emissions and laboratory emissions meant " ‘that fuel economy on average is one quarter worse than advertised.’ " Id. at ¶ 82. However, Plaintiffs do not allege that the quoted statement from Emissions Analytics was specifically applicable to GM's European vehicles, much less diesel engines generally.

Plaintiffs also allege that testing by the Institute for Transport Studies, a U.K. organization, and by the German Federal Department of Motor Vehicles, found that certain GM vehicles were not in compliance with European NOx emissions standards. Id. at ¶¶ 83, 85. The testing by Germany has led to a " ‘voluntary’ recall of 630,000 vehicles in Europe, including GM vehicles." Id. at ¶ 85. Plaintiffs allege that after it became public that Volkswagen had utilized a defeat device in some of its vehicles, GM halted production of the Chevrolet Cruze. Id. at ¶ 86.

Finally, Plaintiffs allege that they have tested the Chevrolet Cruze "using a Portable Emissions Measurement System." Id. at ¶ 87. According to Plaintiffs, that testing revealed that the Cruze was noncompliant with U.S. emissions standards during highway driving (especially speeds over 70 miles per hour), stop-and-go driving, temperatures below 50° fahrenheit, and temperatures over 85° fahrenheit. Id.

D.

Besides the potential environmental impacts of the NOx emissions, Plaintiffs allege that GM's misrepresentations inflicted certain other damages on Plaintiffs. First, Plaintiffs allege that, if GM is forced to alter the 2014 Chevrolet Cruze vehicles to make them compliant with U.S. emissions standards, vehicle performance will be substantially downgraded. Id. at ¶ 90. Because the vehicles "will no longer perform as they...