Lewis v. Mercedes-Benz USA, LLC

530 F.Supp.3d 1183

Timothy LEWIS, Teresa Massa, Linda Gazie, Steven Wallach, Ana Schwartz, Joseph Monopoli, James Fitzpatrick, and Synthia Praglin, on behalf of themselves and all others similarly situated, Plaintiffs,

v.MERCEDES-BENZ USA, LLC, Daimler AG and Grammer AG, Defendants.

CASE NO. 19-CIV-81220-RAR

United States District Court, S.D. Florida.

Signed March 30, 2021

Alissa Del Riego, John Gravante, III, Peter Prieto, Matthew Weinshall, Podhurst Orseck P.A., Benjamin Jacobs Widlanski, Kozyak Tropin Throckmorton LLP, Miami, FL, Gail Ann McQuilkin, Harley Shepard Tropin, Rachel Sullivan, Robert J. Neary, Kozyak, Tropin & Throckmorton, P.A., Meaghan E. Goldstein, Coral Gables, FL, George Franjola, Law Office of George Franjola, Ocala, FL, John Scarola, Searcy Denney Scarola Barnhart & Shipley, West Palm Beach, FL, Michael A. Burger, Santiago Burger, LLP, Rochester, NY, for Plaintiffs Timothy Lewis, Teresa Massa, Linda Gazie, Steven Wallach, Ana Schwartz, Joseph Monopoli, James Fitzpatrick, Synthia Praglin.

Meaghan E. Goldstein, Coral Gables, FL, Benjamin Jacobs Widlanski, Kozyak Tropin Throckmorton LLP, Miami, FL, for Plaintiff Sawntanaia Harris.

Adam Reinke, Pro Hac Vice, Madison H. Kitchens, Pro Hac Vice, Rania Kajan, Pro Hac Vice, Stephen B. Devereaux, Pro Hac Vice, W. Randall Bassett, King & Spalding LLP, Atlanta, GA, for Defendants Mercedes-Benz USA, LLC, Daimler AG.

Anthony Peter Strasius, Steven Craig Jones, Wilson Elser Moskowitz Edelman & Dicker, Miami, FL, Debra Ann Tama, Pro Hac Vice, Frederick W. Reif, Pro Hac Vice, Nathan T. Horst, Pro Hac Vice, Wilson Elser Moskowitz Edelman & Dicker LLP, New York, NY, for Defendant Grammer AG.

ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS

RODOLFO A. RUIZ II, UNITED STATES DISTRICT JUDGE

Mercedes-Benz advertises its vehicles as "the best or nothing."¹ Plaintiffs in this lawsuit—who allege that the headrests in their Mercedes vehicles spontaneously eject—might beg to differ. Specifically, Plaintiffs allege that their vehicles contained, at the time of purchase, a latent defect in the headrests that causes them to spontaneously spring forward with significant force, posing a serious threat to their safety. Even worse, according to Plaintiffs, is that Defendants knew about this defect, failed to disclose it, and actively conspired with each other to conceal it. Defendants have a different view, and for a host of factual and legal reasons, ask the Court to dismiss this case in its entirety.

Before the Court is Defendants’ Renewed Motion to Dismiss Plaintiffs’ First Amended Complaint [ECF No. 66] ("Motion"). Having reviewed the Motion, Plaintiffs’ Response in Opposition [ECF No. 68] ("Response"), Defendants’ Reply [ECF No. 69] ("Reply"), the record, applicable law, and being otherwise fully advised, it is hereby

ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss is GRANTED IN PART as set forth herein.

BACKGROUND

When a car is impacted from behind, or "rear-ended," the occupants of the vehicle often experience whiplash from the resulting forceful back-and-forth movement of their necks. In an effort to solve this problem, Defendants Mercedes Benz USA, LLC ("MBUSA") and Daimler AG ("Daimler" and together with MBUSA, the "Mercedes Defendants") embedded in the headrests of their vehicles a mechanism known as an Active Head Restraint ("AHR"), which is designed to spring forward in the event of a rear-end collision and rapidly push the cushioned headrest out to catch the occupant's head. First Am. Compl. [ECF No. 22] ("FAC") ¶ 1. The headrest and AHR are manufactured by Defendant Grammer AG ("Grammer") and installed in the vehicles of the Mercedes Defendants, who branded the product "NECK-PRO." Id.

The forward-facing padded surface of the NECK-PRO headrest is mounted to a plastic carriage that is loaded by pre-tensioned springs when stowed in the headrest. Id. ¶ 121. The carriage contains a plastic bracket that acts as the triggering mechanism and holds the spring-loaded release in place until an electronic sensor connected to the vehicle's computer control unit indicates that a rear-end collision is occurring. Id. ¶ 122. When the sensor detects a rear-end collision, it triggers the bracket to release, allowing the carriage to be forced forward by the springs. Id.

Obviously, these devices are only supposed to deploy upon an external force onto the car. But the First Amended Complaint alleges that Defendants designed the bracket with an inferior and inexpensive form of plastic, which cracks and breaks down prematurely under the constant pressure of the tensed springs in the headrest, causing the AHR to spontaneously deploy. Id. The force of the impact not only can cause bodily harm to the head and neck, but also creates a risk of collision when the headrest deploys suddenly while the vehicle is being driven. Id. ¶ 2. Plaintiffs state that the vehicles equipped with the defective NECK-PRO in the United States number at least in the "hundreds of thousands," and there is no way for a vehicle owner to predict when the AHR in the headrest will deploy. Id. ¶ 3.

Plaintiffs’ First Amended Complaint avers that Defendants possessed exclusive and superior knowledge of the defect as early as 2006 based upon

[E]ngineering design reports, pre-production testing, pre-production design failure mode analyses, manufacturing and design validation reports, plastic aging tests, plastic material data reports, consumer complaints to the National Highway and Traffic Safety Administration ("NHTSA"), consumer complaints to MBUSA dealerships, consumer complaints on website forums, aggregate warranty data compiled from MBUSA dealerships, and repair orders and parts data received from dealerships.

Id. ¶ 7. Plaintiffs also point to a Technical Service Bulletin ("TSB")² issued by the Mercedes Defendants to their network of dealerships in 2007 entitled "Restraints – Head Restraint Activate Without Cause," which stated that the problem "may be caused by damage to the seat wiring harness causing a short circuit." Id. ¶ 161. Despite having this information, Defendants purportedly conspired to conceal the defect from the public while continuing to manufacture and sell vehicles with the defect. Moreover, Defendants continued to publicly promote the safety of their vehicles. Plaintiffs allege they were misled by these public communications, which caused them to purchase Mercedes vehicles that they otherwise would not have if they had known of the defect.

The nine Plaintiffs in this case are Timothy Lewis, Linda Gazie, Steven Wallach, Teresa Massa, Ana Schwartz, Joseph Monopoli, James Fitzpatrick, Synthia Praglin, and Sawntanaia Harris. Lewis, Gazie, Wallach, Massa, and Schwartz are residents of Florida; Monopoli is a resident of New York; Fitzpatrick is a resident of North Carolina; and Praglin and Harrris are residents of California. These Plaintiffs are owners of a Mercedes vehicle with NECK-PRO headrests and purchased their vehicles between 2011 and 2019. They purport to be class representatives for a nationwide class ("Nationwide Consumer Class")—in addition to a Florida subclass, a New York subclass, a California subclass, and a North Carolina subclass—all comprised of current or former owners and lessors of vehicles with defective NECK-PRO headrests ("Class Vehicles"). See id. ¶ 211. The First Amended Complaint asserts the following claims:

• Count I: Violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), against the Mercedes Defendants on behalf of Plaintiffs and the Nationwide Consumer Class;

• Count II: Violation of RICO, 18 U.S.C. § 1962(d), against all Defendants on behalf of Plaintiffs and the Nationwide Consumer Class;

• Count III: Violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), FLA. STAT. § 501.201 et seq. , against the Mercedes Defendants on behalf of a Florida subclass;

• Count IV: Violation of the New York General Business Law § 349 against the Mercedes Defendants on behalf of a New York subclass;

• Count V: Violation of the New York General Business Law § 350 against the Mercedes Defendants on behalf of a New York subclass;

• Count VI: Violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. , against Defendant MBUSA on behalf of a California subclass;

• Count VII: Violation of the California Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq. , against the Mercedes Defendants on behalf of a California subclass;

• Count VIII: Violation of the California False Advertising Law, Cal. Bus. & Prof. Code § 17500 et seq. , against the Mercedes Defendants on behalf of a California subclass;

• Count IX: Violation of the Song-Beverly Consumer Warranty Act, Cal. Civ. Code §§ 1791.1 and 1792 for breach of the implied warranty of merchantability against the Mercedes Defendants on behalf of a California subclass;

• Count X: Violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 et seq. , against the Mercedes Defendants on behalf of a North Carolina subclass;

• Count XI: Fraudulent concealment against the Mercedes Defendants on behalf of the New York, California, and North Carolina subclasses;

• Count XII: Fraud by concealment against Defendant Grammer on behalf of the New York, California, and North Carolina subclasses;

• Count XIII: Violation of the Magnuson-Moss Warranty Act ("MMWA"), 15 U.S.C. § 2301 et seq. , against the Mercedes Defendants on behalf of the Nationwide Consumer Class;

• Count XIV: Violation of the MMWA, 15 U.S.C. § 2301 et seq. , against Defendant Grammer on behalf of the Nationwide Consumer Class;

• Count XV: Unjust enrichment against the Mercedes Defendants on behalf of the Nationwide Consumer Class; and

• Count XVI: Unjust enrichment against Defendant Grammer on behalf of the Nationwide Consumer Class.

Defendants have now moved to dismiss all counts under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(2) for lack of personal and...