Sharma v. Volkswagen AG

524 F.Supp.3d 891

Neeraj SHARMA, et al., Plaintiffs,

v.VOLKSWAGEN AG, et al., Defendants.

Case No. 20-cv-02394-JST

United States District Court, N.D. California.

Signed March 9, 2021

Joel Dashiell Smith, Bursor & Fisher, P.A., Walnut Creek, CA, Frederick J. Klorczyk, III, Bursor & Fisher, P.A., New York, NY, for Plaintiffs.

Brian Thomas Carr, Pro Hac Vice, Herzfeld and Rubin PC, Homer B. Ramsey, Pro Hac Vice, Michael B. Gallub, Pro Hac Vice, Herzfeld and Rubin, New York, NY, Craig Lee Winterman, Herzfeld & Rubin LLP, Los Angeles, CA, for Defendant Volkswagen Group of America, Inc.

Jeremy James Calsyn, Larry Work-Dembowski, Pro Hac Vice, Nowell Bamberger, Pro Hac Vice, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC, Ragesh K. Tangri, Catherine Y. Kim, Durie Tangri LLP, San Francisco, CA, for Defendant Robert Bosch LLC.

ORDER GRANTING MOTIONS TO DISMISS

Re: ECF Nos. 54, 59

JON S. TIGAR, United States District Judge

Before the Court are Defendant Volkswagen Group of America, Inc.’s and Defendant Robert Bosch LLC's motions to dismiss. ECF Nos. 54, 59. The Court will grant the motions.

I. BACKGROUND

A. Procedural History

Plaintiffs Neeraj Sharma and Stephan Moonesar filed this putative class action on April 8, 2020 against Defendants Volkswagen AG, Volkswagen Group of America, Inc., Audi AG, Audi of America LLC, Robert Bosch GmbH, and Robert Bosch LLC, based on an alleged defect in certain Volkswagen and Audi vehicles that causes the automatic emergency braking system ("AEB system") to falsely¹ engage randomly and unexpectedly. ECF No. 1 ¶ 4. In response to Defendants’ prior motions to dismiss, ECF Nos. 34, 42, Plaintiffs filed an amended complaint on July 31, 2020, ECF No. 47.

This operative first amended complaint ("FAC") asserts four claims. Id. ¶¶ 118-167. Plaintiff Sharma alleges (1) violation of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200 et seq., against both Defendants; and (2) violation of the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq., against Volkswagen Defendants. Plaintiff Moonesar alleges (3) violation of the New Jersey Consumer Fraud Act ("NJCFA") against Volkswagen Defendants. Additionally, both Plaintiffs bring (4) a claim of unjust enrichment against both Defendants. In addition to certain class certifications and declaratory judgments, the FAC seeks "[a]n order ... enjoining Defendants from continuing the unlawful, deceptive, fraudulent, harmful, and unfair business conduct and practices"; "[i]njunctive and equitable relief in the form of a comprehensive program to repair the AEB Defect, and/or buyback all Class Vehicles, and to fully reimburse and make whole all Class and Subclass members for all costs and economic losses"; and "[a]n order awarding ... restitution, disgorgement, punitive damages, treble damages, exemplary damages and statutory damages[,] and compensatory damages for economic loss and out-of-pocket costs." Id. at 65.

Defendant Volkswagen Group of America, Inc. ("Volkswagen") moves to dismiss on the grounds that Plaintiffs lack Article III standing, that Plaintiffs fail to satisfy the pleading requirements of Rule 9(b), and that Plaintiffs fail to state a claim upon which relief can be granted. ECF No. 54. Defendant Robert Bosch LLC ("Bosch") moves to dismiss on the grounds that Plaintiffs lack Article III standing, that Bosch is not subject to personal jurisdiction in California, and that Plaintiffs fail to state a claim upon which relief can be granted. ECF No. 59.

B. Factual Background

Sharma and Moonesar seek to represent a class of individuals who purchased or leased a Volkswagen or Audi vehicle equipped with an AEB System that utilizes either a Bosch mid-range radar sensor ("MRR") or a long-range radar sensor ("LRR") (collectively, "Class Vehicles"). FAC ¶¶ 3, 109. Plaintiffs allege that "every Class Vehicle ... uses the same, or substantially similar, Bosch-supplied AEB Systems, all of which manifest the same AEB Defect." Id. ¶ 50. That defect, the FAC alleges, "causes the Class Vehicles to detect non-existent obstacles, thereby automatically triggering the brakes and causing the Class Vehicles to abruptly slow down or come to a complete stop, sometimes in the middle of traffic." Id. ¶ 4.

According to the FAC, Bosch has known about the alleged defect since at least 2011 based on pre-production testing, as well as pre-production and production design failure mode and data analysis. Id. ¶ 45. Bosch also knew about the alleged defect at the time that it lobbied the National Highway Traffic Safety Administration's ("NHTSA"), as demonstrated by the Administration's representation that "Bosch said there is no single test that will fully address the problem of false activations."

Id. ¶ 47. Likewise, Volkswagen has known about the alleged defect since at least 2014 based on similar testing and data analysis, as well as early customer complaints, aggregate warranty data, and repair order and parts data transmitted by Volkswagen dealers. Id. ¶ 54. The FAC alleges that Volkswagen has "acknowledged" the existence of the alleged defect by "disclos[ing] the risk of false activations" of the AEB system "in small print buried in the middle of manuals that were hundreds of pages long." Id. ¶ 57, 59. Volkswagen also demonstrated its "long-standing knowledge of the AEB Defect and inability to fix it" in a "Technical Tip" publication which addressed customer concerns that "their vehicle performed an unwarranted autonomous braking event." Id. ¶ 65. Finally, the FAC alleges that Volkswagen was also put on notice of the alleged defect by complaints presented by Volkswagen vehicle owners on "enthusiast websites like AudiWorld.com, AudiForums.com, and Audi-Sport.net," id. ¶ 70, and by an "unusually high number of complaints to NHTSA about the AEB Defect," id. ¶ 74.

In Audi vehicles the AEB System is marketed as Audi "pre sense," id. ¶ 58, and in Volkswagen vehicles it is called "Forward Collision Warning & Autonomous Emergency Braking (Front Assist)," id. ¶ 95. Plaintiffs allege that Volkswagen "made and continue[s] to make partial representations about the AEB Systems on Monroney window stickers, which are affixed to the window of every [Volkswagen] and Audi Class Vehicle at the time of sale, and which uniformly tout AEB Systems as a ‘safety/convenience’ feature without disclosing the AEB Defect" or "otherwise direct[ing] Class members to the relevant portions of the owner's manual." Id. ¶¶ 93-94. In addition, Volkswagen advertised the AEB Systems in Audi and Volkswagen vehicles on online platforms which "d[id] not disclose ... that the system is prone to false activations that can cause the car to suddenly stop or slow down for no good reason." Id. ¶¶ 96-97.

The FAC alleges that Bosch lobbied government entities to require AEB technology in new vehicles, and in so doing "either failed to disclose or downplayed the AEB Defect" and "did not disclose that they had not yet found a satisfactory solution to address the radar sensors’ limitations." Id. ¶ 34. Lobbying efforts included responding to the NHTSA request for suggested improvements to its rating system, and recommending that inclusion of crash avoidance systems as a metric and requirement for Monroney Labels. Id. ¶ 36.

Sharma alleges that he leased two vehicles – a 2017 Audi Q7 and an Audi A7 – which were equipped with the AEB System. Id. ¶ 26. Moonesar alleges that he bought a certified pre-owned 2018 Audi S4, also equipped with the AEB System. Id. ¶ 27. Both Plaintiffs claim that they chose these vehicles after reviewing the Monroney window stickers, which advertised the Audi pre sense technology but did not describe defects with the AEB System. Id. ¶¶ 26-27. Both further allege that they have "experienced the AEB Defect ... in the form of unintentional, phantom braking for no reason, and also instances of error messages appearing on [their] dashboard[s] indicating the AEB system [was] not functional." Id. Sharma and Moonesar each state that they would not have leased or bought the vehicles, or would not have done so on the same terms, had they been made aware of this alleged defect. Id.

II. SUBJECT MATTER JURISDICTION

This Court has subject matter jurisdiction over this putative class action pursuant to 28 U.S.C. § 1332(d)(2) because the amount in controversy exceeds $5 million and at least one member in the proposed class of over 100 members is a citizen of a different state from at least one Defendant.² Although Defendants challenge Plaintiffs’ standing, the Court has jurisdiction to determine its own jurisdiction. See Special Invs., Inc. v. Aero Air, Inc. , 360 F.3d 989, 992 (9th Cir. 2004).

III. LEGAL STANDARDS

A. Rule 12(b)(1)

If a plaintiff lacks Article III standing to bring a suit, the federal court lacks subject matter jurisdiction and the suit must be dismissed under Rule 12(b)(1). Cetacean Cmty. v. Bush , 386 F.3d 1169, 1174 (9th Cir. 2004). "A Rule 12(b)(1) jurisdictional attack may be facial or factual. In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004) (citation omitted). Where, as here, the defendant makes a facial attack, the court assumes that the complaint's allegations are true and draws all reasonable inferences in plaintiffs’ favor. Wolfe v. Strankman , 392 F.3d 358, 362 (9th Cir. 2004).

B. Rule 12(b)(2)

In contesting a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating personal jurisdiction. Pebble Beach Co. v. Caddy , 453 F.3d 1151, 1154 (9th Cir. 2006). But where the "motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a...