Ferrari, et al v. Autobahn, Inc. et al

Filing 185

ORDER GRANTING MOTION OF MERCEDES BENZ USA, LLC TO DISMISS FOURTH AMENDED COMPLAINT WITHOUT LEAVE TO AMEND by Judge Yvonne Gonzalez Rogers granting 163 Motion to Dismiss; denying 183 Motion for Leave to File. (fs, COURT STAFF) (Filed on 5/14/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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STEVE FERRARI, ET AL.,
Plaintiffs,

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vs.

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MERCEDES BENZ USA, LLC, ET AL.,
Defendants.

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CASE NO. 17-cv-00018-YGR
ORDER GRANTING MOTION OF MERCEDES
BENZ USA, LLC TO DISMISS FOURTH
AMENDED COMPLAINT WITHOUT LEAVE
TO AMEND
Dkt. No. 163, 183

United States District Court
Northern District of California

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Pending before the Court is the motion of defendant Mercedes Benz USA, LLC

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(“MBUSA”) to dismiss the Fourth Amended Complaint of plaintiffs Steve Ferrari, Mike

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Keynejad, Patricia Reuben, Harold Fethe, John Diaz and Ray Gapasin and the putative class they

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seek to represent. (Dkt. No. 163). MBUSA seeks to dismiss the remaining claims against it on
the grounds that plaintiffs have not alleged a basis for standing and that they have not alleged facts
sufficient to state their claims for fraud, negligent misrepresentation, violation of the California
False Advertising Law (Cal. Bus. & Prof. Code § 17500 et seq., “FAL”), and violation of the
California Consumer Legal Remedies Act (Cal. Civ. Code § 1750, “CLRA”). Having considered
the papers filed in support and in opposition to the motion, including the supplemental filings at
Docket Nos. 179, 180, and 182,1 as well as the pleadings in this action, and for the reasons stated
herein, the Court GRANTS the motion to dismiss WITHOUT LEAVE TO AMEND.

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On January 15, 2019, in the hearing on final approval of the class settlement with other
defendants, plaintiffs proposed filing a Fifth Amended Complaint solely to remove allegations that
were no longer relevant in light of the settlement. On January 24, 2019, Plaintiffs filed their
redline comparison with the proposed Fifth Amended Complaint. (Dkt. No. 178-1.) The Court
thereafter issued an order striking the proposed Fifth Amended Complaint and directing plaintiffs
to show cause why the motion to dismiss the 4thAC should not be granted without leave to amend.
The Court has considered the supplemental filings at Docket Nos. 179, 180, and 182 in connection
with this motion. However, plaintiffs’ additional request to submit a surreply on the grounds that
MBUSA mischaracterized the nature of the settlement and prior pleadings (Dkt. No. 183), is
DENIED for lack of good cause shown.

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PROCEDURAL HISTORY

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This instant action is a new complaint filed by some of the same plaintiffs as the Ferrari et

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al. v. Autobahn, Inc. et al., Action No. 4:15-cv-04379-YGR litigation previously dismissed by this

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Court. Plaintiffs filed San Mateo Superior Court and defendant MBUSA removed this action to

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United States District Court
Northern District of California

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this Court, on the basis of the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), 1453, and
1711–1715. Shortly after removal, plaintiffs filed a First Amended Complaint (FAC). (Dkt. No.
14.) MBUSA moved to dismiss the FAC, and this Court granted the motion in part with leave to
amend, finding that plaintiffs had failed to allege reliance and injury sufficient to state a fraud
claim based on the allegations that MBUSA had made false statements about the longevity and
superiority of genuine Mercedes Benz parts. (Dkt. No. 64.)
Plaintiffs thereafter filed a Second Amended Complaint (Dkt. No. 69, “SAC”), and
MBUSA again moved to dismiss (Dkt. No. 84). After the motion to dismiss the SAC was fully
briefed, plaintiffs untimely sought leave to file a Third Amended Complaint (“TAC”). The Court
granted the motion to dismiss with leave to amend and directed plaintiffs to amend the allegations

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in the proposed TAC accordingly. (Dkt. No. 117.) In that Order, the Court noted that the

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proposed TAC plaintiffs submitted still did not address the issue that had caused the Court to

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dismiss the fraud-based claim against MBUSA previously: failure to allege reliance and resulting

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injury. (Id. at 4, 5.) The Court noted that alleging “some but not all” plaintiffs relied on the

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representations “without alleging the facts about whether any plaintiff saw the advertising making

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such representations, only served to add to the insufficiency of the pleading.” (Id. at 4.) The

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Court ruled that:

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[while] the proposed TAC does not repeat this language, [it] also does not allege
that plaintiffs viewed, found material, and relied upon the alleged advertising (or
which plaintiffs did so). The Ninth Circuit has required such allegations in the
context of alleged false representations in advertising in order to state the claim.
See Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009); see also
Ehret v. Uber Techs., Inc., 68 F. Supp. 3d 1121, 1128 (N.D. Cal. 2014) (citing
Kearns for the proposition that Rule 9(b) “encompasses the circumstances
surrounding reliance”). Having failed to allege those facts sufficiently in the SAC
or in the proposed TAC, the Court GRANTS the motion to dismiss claim four of
the SAC, and directs plaintiffs to amend those allegations before filing a third
amended complaint . . . . Plaintiffs are directed to revise their proposed TAC to
address the reliance and resulting injury elements in connection with their fraud
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and misrepresentation claims concerning false representations of longevity or
superiority.

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(Id. at 4, 5.)

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Following this Order, plaintiffs filed their TAC on February 6, 2018 (Dkt. No. 126).

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Subsequently, they filed a motion for preliminary approval of a settlement with the other

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defendants to this action2 and filed a Fourth Amended Complaint (“4thAC”) without first seeking

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leave of Court to do so. The Court initially ordered plaintiffs to show cause why the 4thAC

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should not be stricken. (Dkt. No. 141.) Once the parties confirmed that the 4thAC was being filed

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consistent with the terms of the settlement, and that all parties stipulated to its filing, the order to

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United States District Court
Northern District of California

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show cause was withdrawn and the 4thAC was deemed filed. (Dkt. No. 143.) The instant motion
to dismiss is thus directed to the allegations of the 4thAC.
II.

REMAINING ALLEGATIONS AGAINST MBUSA -- SUPERIORITY AND LONGEVITY CLAIMS
The plaintiffs concede that, to the extent the 4thAC alleged claims against MBUSA based

upon the use of non-Genuine Parts for service and repairs, the Certified Pre-Owned vehicle
program, and the use of the zMax additive, those claims have been settled and released as part of
the class action settlement previously approved by the Court. (Dkt. No. 165, Opposition, at 1.)
The claims in the 4thAC that remain are based on allegations that MBUSA falsely represented
Genuine Parts to have greater longevity and superior quality compared to non-Genuine Parts.
Those claims are: (a) Count Two under the CLRA on behalf of the class; (b) Count Five under the

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FAL on behalf of the class; (c) Count Nine for fraud on behalf of the individual named plaintiffs

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only; and (d) Count Ten for negligent misrepresentation on behalf of the individual named

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plaintiffs only.

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The claims are based on the following allegations regarding MBUSA’s advertising:

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MBUSA’s website states, “[u]sing only Genuine Mercedes-Benz Parts affords you measurable

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differences every mile you travel. Longevity, safety and warranty are just a few of many reasons

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Plaintiffs and defendants Autobahn and Sonic agreed to settle the entire action “except
those relating to MBUSA’s advertising claims relating to longevity and superiority of MercedesBenz [G]enuine [P]arts.” (Dkt. No. 136-1, Settlement Agreement ¶ 33 [“The claims in the Action
that are not released as to MBUSA are reflected in the Third Amended Complaint in Count II
(CLRA), Count III (UCL), Count IV [sic] (FAL), and Count IX (Common Law Fraud).”].) In
opposition to the instant motion, plaintiffs verified that the UCL claim was likewise resolved by
the settlement. (Oppo. at 1:25-26.)
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to buy Genuine Parts.” (4thAC 86(a).) The website and MBUSA print brochures go on to tout

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MBUSA’s products:
Oil filters: “can last 45% longer than other aftermarket oil filters.”
Air filters: “lasts at least 40,000 miles. Other aftermarket filters might
need to be replaced at 12,000 miles.” and “capture 28% more soot over
their lifetime than most brands.”
Cabin filters: “are 36% more effective at filtering soot than tested
aftermarket filters.”
Wiper blades: “can provide up to 800,000 more wiping cycles than other
aftermarket brands.”
Brakes: “tested lower in vibration versus other aftermarket brands.”

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(Id. ¶ 86(b).) The 4thAC alleges that “[t]hese statements are materially false when the so-called

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non-Genuine ‘aftermarket’ parts are produced by the same manufacturers that produce Genuine

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Parts for Mercedes-Benz.” (4thAC ¶ 87.) Additional allegations contend that Mann Filters

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United States District Court
Northern District of California

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perform as well as Genuine MBUSA filters and that Bosch spark plugs made with the Genuine

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logo are identical to other spark plugs made by Bosch at a lower price. (Id. ¶¶ 90-92.) The 4thAC

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alleges that “Defendants knowingly concealed from Plaintiffs and members of the class the true

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facts regarding non-Genuine [P]arts in order to cause them to purchase only Genuine Parts despite
virtually identical parts made by the same manufacturer being available at reduced prices.” (Id.
¶ 102.)
The CLRA claim relies on the foregoing statements to allege MBUSA “violate[d] this
[statute] by making unfounded superiority and longevity claims regarding Genuine Parts as
described herein.” (Id. ¶ 165.) The FAL claim adds that “[m]embers of the Genuine Parts Class
suffered damages as a result of Defendants’ advertising campaign depicting Genuine Mercedes
Parts as lasting longer and being of superior quality to all aftermarket products, when many
aftermarket products cost significantly less and are identical to the Genuine Parts and sold by the

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same manufacturer.” (Id. ¶ 213.) The individual plaintiffs’ claim for fraud alleges that “[p]laintiffs

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relied on these representations and were damaged as a result [because they] were led to believe

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that Genuine Parts were of superior quality when compared to all other aftermarket parts.” (Id.

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¶ 276.) Finally, the individual plaintiffs’ claim for negligent misrepresentation alleges that

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“[p]laintiffs reasonably relied on the Defendants’ misrepresentations to their detriment by either

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purchasing but not receiving Genuine Parts during a maintenance visit, purchasing a CPO

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automobile from Autobahn Motors, and/or by bringing their automobiles into Autobahn Motors

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for repairs.” (Id. at ¶ 286.)

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III.

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United States District Court
Northern District of California

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DISCUSSION
A.

Standing

MBUSA first argues that the remaining claims in the 4thAC should be dismissed for lack
of standing because plaintiffs do not allege that they purchased Genuine Parts. The Court agrees.
To establish Article III standing, a plaintiff “must have suffered or be imminently
threatened with a concrete and particularized ‘injury in fact’ that is fairly traceable to the
challenged action of the defendant and likely to be redressed by a favorable judicial decision.”
Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 125 (2014). Here, plaintiffs
allege no injury fairly traceable to MBUSA’s alleged misrepresentations of Genuine Parts’
superiority or longevity. Numerous allegations in the 4thAC allege that plaintiffs received nonGenuine Parts. (4thAC ¶¶ 14-17, 33-36, 50, 57, 60, 77-80 (e.g., “Defendants installed nonGenuine [P]arts into his vehicle,” “non-Genuine [P]arts were installed into his car,” and “received

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non-Genuine and non-OEM parts during those repairs.”). Yet the 4thAC is lacking in any

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allegation that the named plaintiffs purchased or received any Genuine Parts, and specifically does

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not allege that they received any of the Genuine Parts as to which the 4thAC alleges MBUSA

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made misrepresentations (i.e., spark plugs, oil filters, air filters, brake pads, and wiper blades; see

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4thAC ¶ 86(b).)

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Plaintiffs argue the Court should infer that they purchased Genuine Parts based on the

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allegation that “[d]efendants knowingly concealed from Plaintiffs and members of the class the

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true facts regarding non-Genuine [P]arts in order to cause them to purchase only Genuine Parts

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despite virtually identical parts made by the same manufacturer being available at reduced prices.”

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(4thAC ¶ 102, emphasis supplied.) However, this allegation does not state that any person

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actually had Genuine Parts (much less those particular parts identified) installed in their
automobiles. At most, the allegation states that MBUSA acted with the intent to cause consumers
to purchase the Genuine Parts, not that plaintiffs here did so.
Simply alleging misrepresentations without facts to tie those allegations to any injury
suffered by plaintiffs is insufficient to establish that there is an existing “case or controversy”
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between plaintiffs and MBUSA with respect to those misrepresentations. On standing grounds

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alone, the claims must be dismissed.3

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B.

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For much the same reasons, even if the Court were to find that plaintiffs had alleged

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United States District Court
Northern District of California

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Failure to State A Claim

standing, they have failed to allege facts to show they relied upon the alleged misrepresentations
and such reliance caused them harm. In the absence of any allegation that plaintiffs purchased
Genuine Parts, a generalized allegation that MBUSA made misrepresentations “to entice
consumers to enter into transactions involving higher[-]priced Genuine Mercedes-Benz Parts, and
Plaintiffs relied on these representations” (4th AC ¶ 276) is insufficient to allege the fraud-based
claims here. In addition, plaintiffs fail to allege that they were exposed to any of the allegedly
false advertising. These gaps lead to the conclusion that plaintiffs are unable to allege that they
suffered any harm as a result of the alleged misrepresentations by MBUSA.
Plaintiffs’ opposition to the motion, as well as their supplemental briefing, do not salvage
the claims against MBUSA. First, the authorities cited by plaintiffs do not aid the claims in the

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4thAC which allege reliance and causation only in the most conclusory terms. Plaintiffs cite to In

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re Tobacco II for the argument that they need to identify any misrepresentations on which they

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relied in order to state a claims. In re Tobacco II Cases, 46 Cal. 4th 298, 328 (2009). However,

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the case holds that plaintiffs are “not required to plead with an unrealistic degree of specificity that

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[they] relied on particular advertisements or statements.” Id. (emphasis supplied). It still requires

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that “a plaintiff must plead and prove actual reliance to satisfy the standing requirement of section

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17204,” allowing only that a plaintiff “is not required to necessarily plead and prove

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Leaving aside the fact that they do not allege purchasing or receiving Genuine products,
plaintiffs do not explain why their price differential injury is not mooted by the settlement’s
compensation for that injury. Plaintiffs point to the allegations in paragraphs 94-95 of the 4thAC,
which allege that their claim of harm in being charged for higher-priced Genuine [P]arts but
receiving non-Genuine Parts is not inconsistent with their claim that “[i]f the Genuine products are
found not to be of superior quality, then Defendants engaged in unlawful conduct by charging
higher amounts for Genuine Parts.” In their settlement with the Autobahn defendants, plaintiffs
(and the class) were compensated for the price difference between Genuine products and non Genuine products because the non-Genuine products were used. Plaintiffs now seek to recover the
price difference between Genuine and non-Genuine products because MBUSA should not charge
more for them. Plaintiffs’ attempt to allege a “heads I win, tails you lose” scenario does not create
standing.
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individualized reliance on specific misrepresentations or false statements where, as here, those

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misrepresentations and false statements were part of an extensive and long-term advertising

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campaign.” Id. (emphasis supplied). Thus, even if the plaintiff does not point to specific instances,

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some plausible allegation of reliance nevertheless is required. Indeed, in the Whiteley case, cited

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Northern District of California

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by plaintiffs here, the court held that reference to specific misrepresentations was not required in
the context of evidence that the plaintiff had, in fact, been exposed to misinformation in the
tobacco companies’ advertising campaigns, to the point that she “discounted” information from
the government because “the tobacco industry was saying it was ‘safe’ to smoke cigarettes” and
therefore continued smoking in reliance on that misinformation. Whiteley v. Philip Morris Inc.,
117 Cal. App. 4th 635, 682 (2004).4
Second, plaintiffs argue that they have developed evidence to show that many of plaintiffs
were exposed to the MBUSA display ads at the dealership when they brought their automobiles in
for service, or were generally aware of those ads. Even accepting these representations of facts
outside the pleadings at face value, they do not alter the conclusion that plaintiffs never allege they
relied on statements in the advertising in a decision to purchase parts or bring an automobile to the
dealer for service. Exposure to the ads at the dealership, without more, is insufficient to establish
reliance and causation in the absence of any allegations that: (1) plaintiffs actually purchased
Genuine Parts; or (2) plaintiffs took some action different from what they otherwise would have
done based upon seeing those ads. Thus, the proffered evidence would not not alter the Court’s
analysis. Plaintiffs’ assertion that the Court should either allow them to submit this evidence and
convert the motion to one for summary judgment, or allow them to amend to allege this exposure,
would be futile.
Third, plaintiffs’ arguments that the Court’s prior orders preclude MBUSA from attacking
the pleadings are contrary to the record in this case. The Court previously dismissed plaintiffs’
claims against MBUSA for their failure to allege reliance and causation sufficiently. (See Dkt. No.

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Plaintiffs’ citation to Krueger v. Wyeth, Inc., No. 03CV2496 JAH AJB, 2011 WL
8971449 (S.D. Cal. Mar. 30, 2011) is likewise inapposite. The issue there, on class certification,
was whether reliance could be established on a classwide basis based upon evidence of the
company’s representations, not whether the class representative plaintiff had alleged she saw and
relied on the representations in purchasing the product. Id. at *4.
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64 at 13, 16.) These same deficiencies continue in the 4thAC. Moreover, plaintiffs’ contention

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that the Court ordered MBUSA to answer, seizing on an obvious typographical error in the

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minutes of the preliminary approval hearing, is disingenuous, at best. The discussion on the

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record clearly concerned the filing of a responsive pleading by MBUSA and did not require that

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Northern District of California

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MBUSA file an answer. (Dkt. No. 155 [Transcript] at 44-45.) The Court dismissed the SAC with
leave to amend. The parties’ stipulated to a stay such that no defendant was required to answer the
Third Amended Complaint. (Dkt. No. 129.) Pursuant to the terms of plaintiffs’ settlement with
the other defendants, before any responses to the Third Amended Complaint were filed, plaintiffs
filed a Fourth Amended Complaint on May 22, 2018. (Dkt. No. 139.) On June 27, 2018, the
Court approved the stipulation between Plaintiffs and MBUSA to extend its time to “respond” to
the Fourth Amended Complaint to August 10, 2018. (Dkt. No. 150.) Thus, at the time of the July
31, 2018 hearing on the motion for preliminary approval, there would have been no reason for the
Court to order, sua sponte and contrary to the parties’ stipulation, that MBUSA must answer the

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Fourth Amended Complaint rather than file the instant motion to dismiss.5 To the extent there is

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any room for confusion, the Court affirms that it did intend that MBUSA be required to answer

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but to file a responsive pleading.

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IV.

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CONCLUSION
In sum, plaintiffs have not alleged that any one of them purchased a Genuine Part. In the

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absence of such allegations, and with no alleged basis for finding MBUSA’s advertising caused

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them injury, the motion to dismiss is GRANTED WITHOUT LEAVE TO AMEND and plaintiffs’

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claims against MBUSA are DISMISSED WITH PREJUDICE.

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This terminates Docket Nos. 163 and 183.

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IT IS SO ORDERED.

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Dated: May 14, 2019
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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The insincerity of plaintiffs’ argument is belied by the fact that it was buried in plaintiffs’
opposition, rather than offered as a basis to strike the motion the moment it was filed. Plaintiffs
are cautioned that such arguments nearly cross the line into the territory of sanctions for
attempting to mislead the Court.
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