Treuhaft v. Mercedes-Benz USA, LLC

Bruce Treuhaft v. Mercedes-Benz USA, LLC

No. 2:20-cv-11155-SVW-GJS

United States District Court, C.D. California

July 6, 2021

CIVIL MINUTES - GENERAL

STEPHEN V. WILSON, U.S. DISTRICT JUDGE

Proceedings: ORDER GRANTING DEFENDANT'S MOTION TO DISMISS IN PART, AND DENYING IN PART WITH LEAVE TO AMEND [21]

I. Introduction

Plaintiff Bruce Treuhaft leased a 2013 Mercedes-Benz GLK250 on August 3, 2013 from Defendant MB USA, LLC. First Amended Complaint (“FAC”), Dkt. 19 ¶ 8. He purchased the vehicle on December 14, 2015. Id. ¶ 9.

Several years and tens of thousands of miles later, Plaintiff alleges that he began experiencing numerous problems with the vehicle. Between January 30, 2018 and January 27, 2020 Plaintiff brought his vehicle in for repair eight times. Id. ¶¶ 72-79. The issues with his vehicle included air hose problems, engine and oil leaks, diesel particulate filter problems, and problems with the diesel emissions system. Id.

Although the FAC does not clearly explain the relationship between these two sets of allegations, the FAC also alleges his vehicle contains a so-called “defeat device” which conceals the true extent of its diesel emissions. Id. ¶¶ 45-64. In particular, the FAC alleges that his vehicle's BlueTEC Clean Diesel system does not effectively mitigate emissions when ambient temperatures drop below 50 degrees Fahrenheit. Id. ¶ 45. Defendant's marketing campaign described its diesel vehicles as “significantly reduc[ing] greenhouse gases and smog-forming pollutants” and as the world's cleanest diesel vehicles. Id. ¶¶ 36-37.

Plaintiff alleges he relied on the following representations in leasing and purchasing his vehicle are as follows:

• The vehicle had a “clean diesel” engine. Id. ¶ 65.

• Defendant “has been breaking new ground to help preserve the earth for future generations.” Id.

•. “BlueTec clean-diesel engine combines two best-in-class benefits: the smooth, powerful response of 369 lb-ft of torque, and highway fuel-efficiency of up to 33 mpg.” Id.

• “[E]very GLK offers certified ultralow emissions, even in the most stringent of the 50 states.” Id.

•. A salesperson told Plaintiff that the vehicle had a “low-emission clean diesel engine” and “would be a safe and reliable choice.” Id. ¶¶ 65-70.

Plaintiff brings claims for breach of express warranty and implied warranty under the Song-Beverly Consumer Warranty Act as well as a claim for fraudulent inducement. Id.

Before the Court are (1) Plaintiffs motion to remand the case to state court; and (2) Defendant's motion to dismiss under Rule 12(b)(6). For the reasons explained below, the motion to remand is DENIED and the motion to dismiss is GRANTED IN PART and DENIED IN PART with leave to amend.

II. Motion to Remand

a. Legal Standard

Federal courts are courts of limited jurisdiction and have subject matter jurisdiction only where authorized by the Constitution and Congress. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A suit filed in state court may be removed to federal court if the federal court would have had original jurisdiction over the suit. 28 U.S.C. § 1441(a). “The removal statute is strictly construed against removal jurisdiction, and the burden of establishing federal jurisdiction falls to the party invoking the statute.” California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004) (citation omitted). “Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

If a plaintiff contests the amount in controversy alleged in the notice of removal, the defendant must put forth evidence establishing the amount in controversy. See Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 87-89 (2014). When challenged, “the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold.” Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785, 793 (9th Cir. 2018) (citations and quotation marks omitted). However, a plaintiff opposing removal does not raise a factual attack by simply demanding evidence from the removing defendant; instead, a challenge to removal jurisdiction is only raised when the plaintiff “challenge[s] the rationality, or the factual basis, of [the removing defendant's] assertions.” Salter v. Quality Carriers, Inc., 974 F.3d 959, 964 (9th Cir. 2020).

b. Application

Plaintiff argues that this Court lacks diversity jurisdiction over this action because Defendant failed to establish that the amount in controversy exceeds $75, 000. The Court disagrees.

Plaintiff argues that the amount in controversy alleged in Defendant's notice of removal failed to account for a “mileage offset, ” which would reduce the restitution recoverable under the Song-Beverly Act by the loss in vehicle value attributable to Plaintiff's use. See Cal. Civ. Code § 1793.2(d)(2). To calculate that reduction, “the ‘actual price' paid or payable by the buyer for the Vehicle is multiplied by ‘a fraction having as its denominator 120, 000 and having as its numerator the number of miles traveled ... prior to the time the buyer first delivered the vehicle ... for correction.'” Brooks v. Ford Motor Co., 2020 WL 2731830, at *3 (C.D. Cal. 2020) (quoting Cal. Civ. Code § 1793.2(d)(2)(C)).

The FAC alleges that the vehicle had 49, 110 miles on it when he first presented it for repair. FAC ¶ 72. Defendant provided documentary evidence indicating that the vehicle had 47 miles on the odometer when Plaintiff took possession of the vehicle. See Dkt. 29, at 13. The FAC also alleges that Plaintiff paid a total of $43, 057.44. FAC ¶¶ 8-9. Conducting the calculation explained above, a reduction of $17, 604.39 is warranted. The amount in controversy as to Plaintiff's claim for restitution is therefore $25, 453.05.

Adding that to additional amounts implicated by the FAC, the amount in controversy easily clears $75, 000.

The FAC seeks a civil penalty of twice Plaintiff's actual damages. FAC at 34. The amount in controversy encompasses the “maximum recovery the plaintiff could reasonably recover.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019) (citation omitted). The maximum recoverable civil penalty is therefore $50, 906.01. See Brooks, 2020 WL 2731830, at *2 (considering civil penalties in amount in controversy calculation on motion to remand even though defendant did not offer evidence of willful failure to comply with the Song-Beverly Act).

The amount in controversy also encompasses the award of attorney's fees sought in the complaint. “The Ninth Circuit has made clear that ‘Section 1332(a)'s amount-in-controversy requirement excludes only “interests and costs” and therefore includes attorneys' fees.'” Id. at *3 (quoting Guglielmino v. McKee Foods Corp., 506 F.3d 696, 700 (9th Cir. 2007)); see also Fritsch, 899 F.3d at 794 (“[A] court must include future attorneys' fees recoverable by statute or contract when assessing whether the amount-in-controversy requirement is met.”). Relying on evidence from Plaintiff's counsel's fee applications submitted in similar litigation, and excluding the top three awards, Defendant calculated an average fee request from Plaintiff's counsel of $72, 624.36. Dkt. 29, at 15-16. Plaintiff's reply offers no evidence of its own to suggest that this litigation is likely to result in a smaller fee award. Dkt. 31, at 8-9.

Taking these three categories alone, the amount in controversy in this case easily exceeds the $75, 000 threshold. Accordingly, Plaintiff's motion to remand is DENIED.

III. Motion to Dismiss

a. Legal Standard

A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the claims stated in the complaint. See Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, the plaintiff's complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A complaint that offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Id.; see also Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 556 U.S. at 678).

In reviewing a Rule 12(b)(6) motion, a court “must accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the nonmoving party.” Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). Thus, “[w]hile legal conclusions can provide the complaint's framework, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679.

b. Application

i. Breach of Express Warranty

“A plaintiff pursuing an action under the [Song-Beverly] Act has the burden to prove that (1) the vehicle had a nonconformity covered by the express warranty that substantially impaired the use, value or safety of the vehicle (the nonconformity element); (2) the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair (the presentation element); and (3) the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts (the failure to repair element).” Oregel v....