Bledsoe et al v. FCA US LLC et al

Filing 97

OPINION and ORDER DENYING IN PART 67 Defendants' Motions to Dismiss Plaintiffs' Second Consolidated and Amended Class Action Complaint, and GRANTING 68 Defendants' Motions to Dismiss All Magnuson-Moss Warranty Act Claims. Signed by District Judge Terrence G. Berg. (AChu)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JAMES BLEDSOE, et al., on
behalf of themselves and all
others similarly situated,
Plaintiffs,
v.

Case No. 16-14024
Hon. Terrence G. Berg

FCA US LLC, a Delaware
corporation, and CUMMINS
INC., an Indiana corporation,
Defendants.
OPINION AND ORDER DENYING IN PART DEFENDANTS’
MOTIONS TO DISMISS PLAINTIFFS’ SECOND
CONSOLIDATED AND AMENDED CLASS ACTION
COMPLAINT AND GRANTING DEFENDANTS’ MOTIONS
TO DISMISS ALL MAGNUSON-MOSS WARRANTY ACT
CLAIMS (ECF No. 67, 68)
I.

Introduction
Plaintiffs in this proposed putative class action allege that

Defendant FCA’s 2007–2012 Dodge Ram 2500 and 3500 diesel
trucks (the “Trucks” or “Affected Vehicles”), equipped with 6.7-liter
Turbo Diesel engines manufactured by Defendant Cummins Inc.,
emit nitrogen oxides (“NOx”) at levels that exceed federal and state
emissions standards and the expectations of reasonable consumers.
Plaintiffs allege that they purchased their trucks on the basis of
advertising from defendants that touted the trucks as more fuel
1

efficient and environmentally friendly than other diesel trucks.
Plaintiffs allege that despite marketing the trucks as containing
“clean diesel engines,” Defendants knew the trucks discharged
emissions at levels greater than what a reasonable customer would
expect based on the alleged representations. The instant Complaint
alleges violations of the Racketeer Influenced and Corrupt
Organizations Act (“RICO Act”), the Magnuson Moss Warranty Act
(“MMWA”), and consumer protection, breach of contract, and
fraudulent concealment laws of 50 states as well as the District of
Columbia.
Pending before the Court are Defendants’ motions to dismiss
Plaintiffs’ second consolidated and amended class action complaint
(ECF Nos. 67, 68) pursuant, in part, to Federal Rules of Civil
Procedure 9(b), 12(b)(1) and 12(b)(6). For the reasons outlined
below, Defendants’ motions are GRANTED with prejudice as they
pertain to the Magnuson Moss Warranty Act, but DENIED as they
pertain to all other claims.
II.

Background
Plaintiffs seek to bring claims on behalf of themselves and a

nationwide class of all persons or entities in the United States who,
as of November 1, 2016, owned or leased a 2007 to 2012 Dodge Ram
2500 or Dodge Ram 3500 pickup truck equipped with a Cummins
6.7-Liter diesel engine.
2

Plaintiffs also seek to establish sub-classes representing
owners and/or lessees of the Trucks in every state and the District
of Columbia, alleging deceptive advertising, breach of contract, and
fraudulent concealment claims under the laws of those respective
states.
The instant complaint—the Second Amended Complaint
(“SAC”)—is Plaintiffs’ third complaint before this Court on these
claims. This Court previously granted Defendants’ motions to
dismiss Plaintiffs’ first amended complaint. See Amended
Complaint, ECF No. 22; Motions to Dismiss, ECF Nos. 26 & 27; Op.
and Order, ECF No. 60. In that Opinion, this Court explained the
role of the United States Environmental Protection Agency (“EPA”)
in determining acceptable levels of emissions from diesel-engine
vehicles. ECF No. 60, PageID.8281–83. This Court observed that
Plaintiffs’ claim that Defendants’ installed a “defeat device “in the
trucks was supported by four purported factual allegations. ECF
No. 60, PageID.8288. Despite these allegations, Plaintiffs’
complaint failed to state a claim for relief that was plausible on its
face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); and Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 566 (2007).
In brief, Plaintiffs’ testing of a single truck, under poorlydefined parameters, was not enough to prove the existence of a
“defeat device” where Plaintiffs also did not allege what the “defeat
3

device” did, and purported to rely on factual allegations concerning
engines and vehicles different from the Trucks at issue. See Op. and
Order, ECF No. 60.
Defendant FCA’s briefing attempts to characterize the Court’s
previous Opinion and Order as holding that a Plaintiff may never
rely solely on its own PEMS testing and must always have testing
results from an independent entity in order to allege a plausible
claim. FCA Motion to Dismiss, ECF No. 68, PageID.10250–10251
(quoting Bledsoe v. FCA US LLC, 2018 WL 1535392, at *10-11 (E.D.
Mich. Mar. 29, 2018) (available at ECF No. 60).
This is an incorrect reading of the Court’s previous Order.
While that Order made it clear that other decisions had found
complaints to plausibly allege the presence of specific defeat devices
by coupling PEMS testing results with testing from third-parties,
the Court did not create any specific two-factor test or requirement.
The key inquiry, as the Court explained is whether “the totality of
the allegations amounted to plaintiffs having plausibly pled that
the products received did not live up to the claims made by
Defendants.” ECF No. 60, PageID.8305 (quoting In re MercedesBenz Emissions Litig., 2016 WL 7106020 (D.N.J. Dec. 6, 2016))
(quotation marks omitted). Plaintiffs need to make specific
allegations of fact capable of plausibly showing the presence of a
defeat device. Here, Plaintiffs present a detailed accounting of their
4

own extensive PEMS testing, plus chassis dynamometer testing,
plus data logging, plus an allegation of a specific defeat device that
causes the vehicle to enter active regeneration more frequently in
real world driving than when the vehicle senses it is being tested
for regulatory compliance. In other words, Plaintiffs have included
allegations of considerably expanded testing, extensive details
about the nature of the testing, and have alleged the presence of at
least one specific defeat device. They also provided factual
allegations of an alleged “motive” by defendants for engaging in the
alleged fraud. Defendants have each moved for dismissal pursuant
to Federal Rules of Civil Procedure 8(a), 9(b), 12(b)(1) and 12(b)(6).
Motions to Dismiss, ECF Nos. 67, 68.
a. AECDs and Defeat Devices
Every vehicle that is sold in the United States must first be
issued a certificate of conformity (“COC”) by the EPA that indicates
the vehicle meets federal emissions standards, and an Executive
Order (“EO”) by the California Air Resources Board (“CARB”)
indicating it meets California’s emissions regulations (if it is to be
sold in California). ECF No. 62, PageID.8385–8390. When an
automobile manufacturer seeks to obtain a COC and an EO they
must disclose all Auxiliary Emission Control Devices (“AECDs”)
present in the vehicle. ECF No. 62, PageID.8340–8341; Cummins
Motion to Dismiss, ECF No. 67, PageID.9685–9686; FCA Motion to
5

Dismiss, ECF No. 68, PageID.10258. AECDs are devices that alter
the normal operation of the emissions system in a vehicle. ECF
No.67, PageID.9685–9686; ECF No. 68, PageID.10258–10259.
AECDs are necessary to ensure adequate performance in certain
scenarios, and are not illegal on their own. ECF No. 68,
PageID.10259. But when an AECD is designed to circumvent
emissions standards requirements, and is not disclosed in the
application for a certificate of conformity, it is called a “defeat
device,” and it is illegal. ECF No. 68, PageID.10259. The discovery
of “defeat devices” in certain Volkswagen vehicles created an
international scandal that led to billions of dollars in fines and
awards against that company, as well as tremendous reputational
harm. ECF No. 62, PageID.8340.
Vehicle emissions testing commonly occurs on a device called
a chassis dynamometer. ECF No. 62, PageID.8430. This device
works like a treadmill for cars and trucks: the wheels are on rollers
that allow them to spin freely, but the vehicle never moves. ECF
No. 62, PageID.8422. This setup allows test operators to run the
vehicle through a variety of tests that simulate actual load on the
engine as if they are driving on a road, but without moving the
vehicle at all. Id.
In the Volkswagen vehicle scandal, a “defeat device” was
installed on millions of vehicles that was designed to recognize
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when the vehicle was being tested,1 and to change the vehicle’s
emissions to meet the standards, even though actual on-road
emissions were much higher. ECF No. 62, PageID.8472–8473.
Those “defeat devices” were first discovered by researchers at the
Center for Alternative Fuels Engines and Emissions (“CAFEE”) at
West Virginia University who examined results obtained through a
“portable emission measurement system,” or “PEMS” test. ECF No.
62, PageID.8436. Those researchers were operating under a
contract from the International Council on Clean Transportation,
which mandated that they use PEMS testing. ECF No. 62,
PageID.8436; ECF No. 62, PageID.8429 at n.60. Furthermore,
Plaintiffs allege that “both CARB and EPA make wide use of PEMS
to evaluate vehicles for the presence of defeat devices.” ECF No. 62,
PageID.8429. For instance, Plaintiffs allege that CAFEE worked in
collaboration with CARB in discovering the VW defeat devices. ECF
No. 62, PageID.8429.
Plaintiffs explained different types of algorithms that are used to detect a
chassis dynamometer including:
a) Driven wheels are moving but the front wheels are not turning,
a condition only experienced on a chassis dynamometer. All
modern vehicles are equipped with steering wheel angle sensors
and can detect when the steering wheel is being turned.
b) On a 2-wheel drive vehicle, the driven wheels are moving but
the non-driven wheels are not, a condition only experience on a
chassis dynamometer.
c) On a vehicle equipped with GPS, the vehicle’s wheels are
moving while the GPS position is not changing.
ECF No. 62, PageID.8435–8436.
1

7

Plaintiffs allege here that “the vehicle[s] perform… differently
in a test environment (on the dynamometer) than in the real world
(PEMS testing), which should not be the case unless the emissions
system has been set up with a device to turn the system off or down
during real-world testing.” ECF No. 62, PageID.8337.
III. Standard of Review
To survive a motion to dismiss, a 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). A claim is plausible on its face if the “plaintiff pleads factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Bell Atlantic
Corp. v. Twombly 550 U.S. 544, 556 (2007). Plausibility is not the
same as probability, but rather “asks for more than a sheer
possibility that a defendant has acted unlawfully.” Id. While
plaintiffs are not required to provide “detailed factual allegations,”
Rule 8 of the Federal Rules of Civil Procedure demands “more than
an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).
The first step in assessing the validity of a 12(b)(6) motion to
dismiss is to identify any conclusory allegations contained in the
complaint. Iqbal, 556 U.S. at 679. Although the Court must accept
well-pleaded factual allegations of the complaint as true at the
8

motion to dismiss stage, the Court is “not bound to accept as true a
legal conclusion couched as a factual allegation.” Twombly, 550 U.S.
at 555. Thus, “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice [to
state a plausible claim for relief].” Id. “A plaintiff’s obligation to
provide the grounds of [his] entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Id.
After assuming the truth of all well-pleaded factual
allegations, the second step is for the Court to determine whether
the complaint pleads “a claim to relief that is plausible on its face.”
Iqbal, 556 U.S. at 678–79 (citing Twombly, 550 U.S. at 556). 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.” Id. at 678. In other
words, “factual allegations must be enough to raise a right to relief
above the speculative level.” Twombly, 550 U.S. at 555. A
“plausibility” determination is a context-specific task that requires
the reviewing court to draw on its judicial expertise and common
sense. See Iqbal, 556 U.S. at 679.
Although the Court must accept all well-pleaded facts as true,
conclusory allegations are not entitled to the same assumption of
truth. See Iqbal, 556 U.S. at 678; see also Eidson v. Tennessee Dept.
9

of Children’s Services, 510 F.3d 631 (6th Cir. 2007) (“Conclusory
allegations or legal conclusions masquerading as factual allegations
will not suffice [to state a plausible claim for relief].”) (internal
citations omitted). The Sixth Circuit explained:
[A] plaintiff cannot overcome a Rule 12(b)(6) motion to
dismiss simply by referring to conclusory allegations in
the complaint that the defendant violated the law.
Instead, the sufficiency of a complaint turns on its
“factual content,” requiring the plaintiff to plead enough
“factual matter” to raise a “plausible” inference of
wrongdoing. The plausibility of an inference depends on
a host of considerations, including common sense and
the strength of competing explanations for the
defendant’s conduct.
16630 Southfield Ltd. P’Ship v. Flagstar Bank, F.S.B., 727 F.3d
502, 504 (citing Iqbal, 556 U.S. at 678, 682–83 and Twombly, 550
U.S. at 567).
IV.

Plaintiffs’ Factual Allegations
Plaintiffs’ claim is that 2007–2012 model year Dodge Ram

2500 and 3500 trucks (“Trucks”) were marketed as “clean diesel”
vehicles that complied with federal and state emissions standards
and offered customers the “strongest, cleanest, quietest, best-inclass engine on the market,” but that the Trucks produce emissions
in quantities substantially higher than implied by advertising and
at amounts greater than those permitted by federal and state
regulations. See Cummins Press Release, Exh. 5, ECF No. 62-6
10

(describing engine in above-quoted terms). Plaintiffs also allege
Defendants manufactured the Trucks to include “defeat devices”
that alter the Trucks’ performance so that they perform within the
range of compliance when tested under regulatory conditions, but
not during normal on-road use.
Plaintiffs rely centrally on twelve main factual allegations in
their Second Amended Complaint (“SAC”) to support these claims.
ECF No. 62. To ensure that their complaint crosses the threshold
line of plausibility—and therefore survives the motions to
dismiss—plaintiffs need to allege enough factual matter to allow
this Court to draw a reasonable inference that there is a “defeat
device” in the trucks, and that presence of such a device caused
economic harm to plaintiffs, creating a right of action under federal
and state laws. Plaintiffs made the following twelve well-pleaded
factual allegations in support of their claims:
A. Diesel engines pose unique environmental challenges, and the
U.S. responds with specific regulations;
B. The trucks in question all share a common engine and
aftertreatment design;2
C. The Cummins engine and certification approach were unique;
1. The Cummins engine employed an arrangement of the
Diesel Oxidation Catalyst, NOx Adsorber Catalyst, and
Diesel Particulate Filter that resulted in decreased
cleanliness and fuel efficiency;
Though the aftertreatment system and alleged “defeat devices” are not
technically part of the engine, the Court will, for simplicity’s sake, refer
occasionally to the aftertreatment as being part of the “engine.”
2

11

D. Sales of these diesel engines gave Cummins a competitive
advantage in the heavy-duty engine market;
E. Cummins fraudulently violated EPA standards to obtain
additional energy credits;
F. Dodge and Cummins jointly developed and promoted the
trucks, focusing on emissions and cleanliness, because those
issues were material to a reasonable consumer;
G. FCA has engaged in emissions deceptions before;
H. Plaintiffs tested the trucks using reliable methodology,
including by using PEMS testing, dynamometer testing, and
data logging;
I. Plaintiff’s testing shows that a “defeat device” is present in
the trucks;
J. NOx emissions are harmful to the environment, and Plaintiffs
do not wish to drive vehicles whose emissions deliberately
harm the environment;
K. There is a worldwide emissions scandal;
L. Plaintiffs’ PEMS testing methodology has been used by other
entities to discover defeat devices.
For the following reasons, the Court holds that Plaintiffs have
adequately pleaded enough factual matter to plausibly allege that
a “defeat device” is present in the trucks.
V.

Analysis
In their previous motions to dismiss, defendants called on the

Court to decide how much factual matter must be pleaded to
establish more than conclusory allegation. Defendants make the
same request now. They say that Plaintiffs have filed a repackaged
version of the dismissed amended complaint, and failed again to
plead more than conclusory allegations related to the presence of
“defeat devices” in the trucks. As noted above, although the Court
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accepts all well-pleaded facts as true, conclusory allegations are not
entitled to the same assumption of truth. See Iqbal, 556 U.S. at 678;
see also Eidson v. Tennessee Dept. of Children’s Services, 510 F.3d
631 (6th Cir. 2007) (“Conclusory allegations or legal conclusions
masquerading as factual allegations will not suffice [to state a
plausible claim for relief].”) (internal citations omitted). To
determine whether the instant complaint states a plausible claim
for relief, the Court must identify and weigh the well-pleaded
factual matter contained in the complaint, while not accepting as
true any conclusory legal inferences that are not sufficiently
supported by well-pleaded facts.
a. Plaintiff’s Vehicle Testing Supports a Plausible
Allegation That “defeat devices” are Present in the
Trucks
In their first amended complaint, Plaintiffs alleged that they
conducted portable emission measurement system (“PEMS”)
testing on a single 2012 Dodge Ram 2500, and that this testing
showed high levels of NOx emissions. First Amended Complaint,
ECF No. 22, PageID. 1567–69. But plaintiffs did not include
relevant and material information about the condition of the truck,
or the parameters of the testing, such as the altitude or incline at
which testing occurred. Put simply, Plaintiffs failed to plausibly
allege the presence of a defeat device—the results from their PEMS
13

testing results could have been explained in other ways.3 For these
reasons and others, this Court granted defendants’ motions to
dismiss.
Plaintiffs’ SAC has far more detailed information4 about the
PEMS testing they conducted in furtherance of this lawsuit, and a
better explanation of why this level of testing should be acceptable
to the Court. Plaintiffs PEMS-tested three Dodge Ram 2500 trucks
equipped with the 6.7 liter Cummins diesel engine: a 2007 with
41,000 miles, a 2009 with 48,000 miles, and a 2012 with 73,000
miles. ECF No. 62, PageID.8427. The vehicles “underwent rigorous
inspections” and were examined to ensure the emission control
systems “were intact and free from damage.” Id. Plaintiffs also
performed chassis dynamometer testing on the 2012 truck. Id.; and
PageID.8436–8437. The trucks were tested in both stop-and-go
conditions (emulating city driving) and in steady speed conditions
(highway driving). ECF No. 62, PageID.8437–8441. The trucks
were put through both cold and hot start tests, flat road driving,
and driving on hills. Id. Lastly, in addition to the PEMS testing and
dynamometer, the trucks were fitted with data logging software

For more on the Court’s reasoning, see Opinion and Order, ECF No. 60.
Plaintiffs claimed at the February 15, 2019 hearing that they spent five
paragraphs describing the testing in their previous complaint, but now
dedicate 101 paragraphs (PageIDs.8421–8467) to describing the tests.
3
4

14

that tracked “all vehicle parameters broadcast by the vehicle’s
computer[.]” ECF No. 62, PageID.8465.
Plaintiffs based all their testing on the FTP-75 cycle—the test
standard they allege is used to certify light and medium duty
passenger cars and trucks such as these. ECF No. 62, PageID.8423;
PageID.8437–38. The FTP-75 cycle has three phases to recreate the
dynamic changes in speed and acceleration experienced during city
driving and the steady high speeds of highway driving. Id. Though
the FTP-75 is normally performed on a dynamometer, Plaintiff’s
aver that they designed on-the-road testing that recreated the stopand-go conditions created in the FTP-75 cycle, but with a PEMS
device attached to the truck. ECF No. 62, PageID.8438.
The trucks in question are outfitted with a “Diesel Particulate
Filter” that traps and removes particulate matter from the trucks’
emissions. ECF No. 62, PageID.8342. The trucks also have a “NOx
adsorber catalyst” that captures and reduces NOx into less harmful
substances before releasing those into emissions. ECF No. 62,
PageID.8342. Because it traps particulates, the Diesel Particulate
Filter is prone to getting bogged down and clogging. To avoid this,
the

aftertreatment

engages

in

“regeneration,”

where

the

particulate matter in the Diesel Particulate Filter is burned off at
very

high

temperatures.

ECF

No.

62,

PageID.8398–8399.

Regeneration can be passive or active. Passive regeneration is when
15

the Diesel Particulate Filter has high enough levels of NOx that the
temperature inside gets hot enough on its own to burn the
particulate matter. Id. at PageID.8398. Active regeneration is when
the temperature is not hot enough on its own, so a small amount of
fuel is injected directly into the Diesel Particulate Filter, causing a
small combustion reaction and burning the particulate matter off.
Id. at PageID.8398–8399. Active regeneration destroys certain
particulate matter, but also creates additional NOx pollution. Id.
Because it uses fuel and creates a combustion reaction that is
downstream of other elements of the exhaust cleaning system,
active regeneration creates higher than average emissions, and the
EPA limits how frequently a vehicle enters active regeneration in
normal use. Id. at PageID.8399.
Plaintiffs allege that most diesel aftertreatments are
configured in this order:

16

DIESEL OXIDATION CATALYST → DIESEL PARTICULATE FILTER →
NOX REDUCTION CATALYST

ECF No. 62, PageID.8399.5 This arrangement works well because
NOx passes through the Diesel Particulate Filter first, helping to
cause passive regeneration to occur. Also, the NOx Reduction
catalyst is positioned to capture the additional NOx pollution
created by regeneration events before it is expelled from the vehicle.
Plaintiffs allege that the 6.7L Engine’s aftertreatment is instead
configured like this:

The diagram is the first result returned for an image search on www.google.com for “NOx
Adsorber engine” on March 27, 2019. The Court includes this image for demonstrative
purposes only, and does intend to represent that this image is indicative of any Cummins diesel
engine aftertreatment.
5

17

DIESEL OXIDATION CATALYST → NOX ADSORBER CATALYST →
DIESEL PARTICULATE FILTER

ECF No. 62, PageID.8400. Plaintiffs allege that this arrangement
removes NOx before it enters the Diesel Particulate Filter, so the
Diesel Particulate Filter is unable to engage in passive
regeneration as often as needed to prevent particulate build up. To
compensate, the aftertreatment must engage in relatively frequent
active regeneration, which should—according to Plaintiff—cause
excessively high emissions and poor fuel efficiency.
Using the 2007 truck, Plaintiffs performed stop-and-go
testing over 506 miles, conducting 90 individual tests. ECF No. 62,
PageID.8438. Plaintiffs allege that the average emissions produced
in these tests were 4.4 times the standard, and the vehicle entered
active regeneration cycles 10 times more frequently than disclosed
in certification documents. Id.
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The 2009 truck was also tested in stop-and-go conditions over
453 miles, over a total of 92 tests. Id. This truck averaged 5.3 times
the standard for emissions, and also entered active regeneration
cycles 10 times more frequently than required by certifications. Id.
Finally, the 2012 truck was tested in stop-and-go conditions
over 987 miles, for a total of 181 individual tests. Id. at
PageID.8439. This truck averaged 3.8 times the standard for
emissions, and entered active regeneration cycles six times more
frequently than required by certification. ECF No. 62, PageID.8439.
Based on the results of their tests, plaintiffs allege that
“Cummins introduced a defeat device to dramatically increase the
active regeneration frequency to an average of 14.6% in driving
closely approximating the FTP-75 certification cycle and 13.3% in
steady speed highway driving—7 to 10 times the values permitted
by the reported upward adjustment factors.” ECF No. 62,
PageID.8426. Plaintiffs allege that the defeat device recognizes
when the vehicle is being tested or not, allowing the vehicle to meet
emissions standards in testing only. Plaintiffs allege that their test
results have been controlled for other variables and can only be
explained by the presence of a “defeat device.” Reviewing all of
these detailed allegations, the Court finds that Plaintiffs have
corrected the deficiencies in their previous complaint and has
plausibly alleged that the trucks have a “defeat device” in them.
19

The Court must also answer the question of whether this wellpleaded allegation—that the trucks contain a “defeat device”—is
enough to plausibly support state law claims of deceptive practices
(consumer protection), fraudulent concealment, and breach of
contract, as well as federal claims under the Racketeer Influenced
and Corrupt Organizations Act (18 U.S.C. § 1961, et seq.) and the
Magnuson-Moss Warranty Act (15 U.S.C. § 2301, et seq.). But
before these specific claims can be addressed, the Court must
consider whether Plaintiffs can bring claims under the laws of
states in which no named plaintiff lives. Defendants argue that
Plaintiffs may not.
b. Class Certification is Logically Antecedent to
Determination of Article III Standing because
Plaintiff’s Injuries Are Not In Doubt
Article III standing is a threshold question in every federal
case and “determin[es] the power of the court to entertain the suit.”
In re Packaged Ice Antitrust Litig., 779 F. Supp. 2d 642, 653 (E.D.
Mich. 2011) (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)).
Proceeding as a putative class does not alter the “fundamental
requirement of standing,” and named plaintiffs must show “that
they personally have been injured, not that injury has been suffered
by other, unidentified members of the class … which they purport
to represent.” In re Packaged Ice, 779 F. Supp 2d at id.; Lewis v.
20

Casey, 518 U.S. 343, 357 (1996). “Class representatives without
personal standing cannot predicate standing on injuries suffered by
members of the class but which they themselves have not or will
not suffer.” In re Packaged Ice, 779 F. Supp. 2d at 653 (quoting
Rosen v. Tennessee Comm'r of Fin. and Admin., 288 F.3d 918, 928
(6th Cir. 2002)).
Courts have been split in the past on the issue of whether to
determine issues of standing before or after certifying a class. See
generally, Linda S. Mullenix, Standing and Other Dispositive
Motions After Amchem and Ortiz: The Problem of “Logically
Antecedent” Inquiries, 2004 MICH. ST. L. REV. 703, 729 (2004); also
compare Hoving v. Transnation Title Ins. Co., 545 F. Supp. 2d 662,
668 (E.D. Mich. 2008) (Lawson, J.) (class certification is logically
antecedent to, and should be decided before, the determination of
standing), with Smith v. Lawyers Title Ins. Co., No. 07–12124, 2009
WL 514210 at *3 (E.D. Mich. March 2, 2009) (Murphy, J.)
(construing “logically antecedent” to permit consideration of
standing issues prior to class certification). In cases where putative
plaintiffs’ injury is in doubt, issues of standing should be resolved
before the class certification stage, observing that a “court must be
sure of its own jurisdiction before getting to the merits.” In re
Packaged Ice, 779 F. Supp. 2d at 655, 657 (quoting Easter v.
American West Financial, 381 F.3d 948 (9th Cir. 2004)). Bearing
21

this in mind, the Court turns now to assess whether plaintiffs’
injury is in doubt.
“Plaintiffs seek damages and equitable relief for Defendants’
misconduct related to the design, manufacture, marketing, sale,
and lease of Polluting Vehicles with undisclosed, unreasonable,
and/or unlawfully high emissions and impaired fuel economy[.]”
ECF No. 62, PageID.8350. Plaintiffs do not seek damages related to
injury of the environment (PageID.8470), nor for personal injury
claims that may arise from the allegedly high emissions of the
trucks (PageID.8486).6 Instead, Plaintiffs allege they have suffered
“ascertainable loss … including, but not limited to, out-of-pocket
loss, which can be measured at a minimum in part by the
approximately $9,000 premium paid for a diesel vehicle over a
comparable gas vehicle, and higher fuel costs due to the higher fuel
consumption caused by the excessive active regeneration.” ECF No.
62, PageID.8352. “Plaintiffs' allegations that they overpaid for the
vehicle based on [a manufacturer’s] representations constitute

Cf. Counts v. Gen. Motors, LLC, 237 F. Supp. 3d 572, 589 (E.D. Mich. 2017)
(“To the extent Plaintiffs are seeking damages based solely on … alleged
violations of the CAA, those claims are preempted.”) (citing Beshear v.
Volkswagen Grp. of Am., Inc., No. 16–CV–27–GFVT, 2016 WL 3040492, at *4
(E.D. Ky. May 25, 2016) (“Any such attempt by states or private parties to seek
damages or other remedies based on alleged violations of the CAA is strictly
prohibited in light of the broad sweep of the CAA, and thus state common law
tort claims premised on the failure to meet CAA standards are preempted.”)).
6

22

economic injury sufficient to establish Article III standing.” Counts
v. Gen. Motors, LLC, 237 F. Supp. 3d 572, 583 (E.D. Mich. Feb. 14,
2017) (Ludington, J.) (“Counts I”).
Plaintiffs bring claims under RICO—among other statutes—
which holds that plaintiffs suffered a cognizable injury only when
“he has been injured in his business or property by the conduct
constituting the violation.” Kramer v. Bachan Aerospace Corp., 912
F.2d 151, 154 (6th Cir. 1990). RICO plaintiffs must show that they
suffered a concrete, out-of-pocket loss of tangible property. Wall v.
Michigan Rental, 852 F.3d 492, 494 (6th Cir. 2017).
Plaintiffs allege that the emissions controls in the 6.7L diesel
engine did not function as advertised in most ordinary driving and,
as a result, the trucks routinely emitted NOx at levels far in excess
of what a reasonable consumer would expect, and burned more fuel
as a result of the design of the aftertreatment. Plaintiffs’ Response,
ECF No. 70, PageID.11495. Plaintiffs further allege that
Defendants overcharge approximately $9,000 per truck (compared
to comparable gas-powered trucks) plus additional fuel purchase
costs based on misrepresentations made possible by the presence of
a “defeat device.” Id.; see also Counts I, 237 F. Supp. 3d at 583.
Plaintiffs do not have to plead with specificity how this overcharge
is calculated yet. Chrysler-Dodge-Jeep EcoDiesel Mktg., Sales
Practices, & Prod. Liab. Litig., 295 F. Supp. 3d 927, 964 (N.D. Cal.
23

2018) (“CDJ EcoDiesel”). Rather, they must simply plead the fact
that damages have been incurred by plaintiffs, and estimate the
amount of those damages. Taken together, the allegations in the
SAC clearly allege an injury-in-fact. See In re Duramax Diesel
Litig., 298 F. Supp. 3d 1037, 1052 (E.D. Mich. 2018) (Ludington, J.)
(“Plaintiffs’ overpayment theory suffices to provide standing to sue
GM”); Ackerman v. U.S. Dep’t of Agric., 2018 WL 1858165, at *7
(E.D. Mich. Apr. 18, 2018) (“Claims of overpayment, wherein a
plaintiff paid a premium but did not receive the anticipated
consideration, are cognizable injuries in fact.”) (citing Wuliger v.
Mfrs. Life Ins. Co., 567 F.3d 787, 794 (6th Cir. 2009)); CDJ
EcoDiesel, 295 F. Supp. 3d at 945–51 (“Allegations of overpayment
based on a defendant’s failure to disclose a product’s limitations are
clearly

sufficient

to

satisfy

Article

III’s

injury-in-fact

requirement.”); Counts I, 237 F. Supp. 3d at 582–83 (injury-in-fact
where “Plaintiffs allege that GM’s misrepresentations resulted in
their overpaying for a vehicle because the vehicle did not work in
the way GM promised it would.”).
Defendants also claim that Plaintiffs have failed to identify
the very specific advertisement to which they each were exposed,
and that caused them to purchase their vehicles. FCA Motion to
Dismiss, ECF No. 68, PageID.10266. But Plaintiffs need only allege
“injury that fairly can be traced to the challenged action of the
24

defendant, and not injury that results from the independent action
of some third party not before the court. Counts I, 237 F. Supp. 3d
at 585–86 (quoting Wuliger v. Manufacturers Life Ins. Co., 567 F.3d
787, 796 (6th Cir. 2009). “Proximate causation is not a requirement
of Article III standing.” Lexmark Int'l, Inc. v. Static Control
Components, Inc., 134 S. Ct. 1377, 1394 (2014). Thus, the purpose
of causation is to “eliminate those cases in which a third party and
not a party before the court causes the injury.” Counts I at id.
(quoting Am. Canoe Ass'n, Inc. v. City of Louisa Water & Sewer
Comm'n, 389 F.3d 536, 542 (6th Cir. 2004)).
For these reasons, Plaintiffs’ injuries here are not in doubt,
nor is their claim that they relied upon the advertising of both
Defendants in deciding to purchase their particular vehicles.
Plaintiffs are not seeking relief for themselves under the laws of
states where they don’t live. They instead are advancing “claims for
relief under the statutes of the jurisdictions in which they reside
but seek similar relief for absent class members” under the statutes
for consumer protection, fraudulent concealment, and breach of
contract of those absent members’ states. In re Auto. Parts Antitrust
Litig., No. 12-MD-02311, 2013 WL 2456612, at *11 (E.D. Mich.
June 6, 2013) (Battani, J.). Similarly, in Hoving v. Transnation
Title Ins. Co., this district found that when the claim of named
plaintiffs “is typical of those individuals whose claims arise under
25

the laws of other states,” the “question whether he has standing to
proceed as a class representative will be subsumed in the class
certification decision.” 545 F. Supp. 2d 662, 667–68.
Consistent with the approaches in In re Auto. Parts and
Hoving, the certification issues in the instant case are logically
antecedent to the Article III standing concerns, and the
determination of standing will be postponed until a class
certification ruling. See In re Auto. Parts, No. 12-MD-02311, 2013
WL 2456612, at *9 (quoting Amchem Prods., Inc. v. Windsor, 521
U.S. 591, 612 (1997)).
c. Clean Air Act Preemption
Defendants contend that all of Plaintiffs’ state law claims are
pre-empted by the Clean Air Act (“CAA”). Cummins Motion to
Dismiss, ECF No. 67, PageID.9655 (citing 42 U.S.C. § 7543(a) (“No
state or any political subdivision thereof shall adopt or attempt to
enforce any standard relating to the control of emissions from new
motor vehicles or new motor vehicle engine subject to this part.”);
and Counts I , 237 F. Supp. 3d at 589 (CAA preempts civil action to
the extent it is based on alleged violations of the CAA)). Cummins
contends that the EPA has “uniform emission standards and
testing protocols for motor vehicles in the United States, along with
a set of enforcement provisions and penalties for ensuring
compliance with these regulations” per 42 U.S.C. § 7521. ECF No.
26

67, PageID.9707. Cummins also contends that Congress “included
a broad preemption provision in the CAA to prevent precisely the
type of ad hoc emission standards that Plaintiffs seek to impose
here.” Id.
Defendants therefore maintain that Plaintiffs are attempting
to “enforce a standard relating to the control of [vehicle] emissions,”
and that such attempts are preempted because they relate to “the
control of emissions from new motor vehicles or new motor vehicle
engine[s].” See ECF No. 67, PageID.9707–9708; see also 42 U.S.C. §
7543(a) (“No state or any political subdivision thereof shall adopt or
attempt to enforce any standard relating to the control of emissions
from new motor vehicles or new motor vehicle engine subject to this
part.”); and In re Office of Attorney Gen. of State of N.Y., 269 A.D.
2d 1, 3, 709 N.Y.S. 2d 1 (2000) (Court finding that action by a state
attorney general focused on punishing vehicle manufacturers for
purposely circumventing federal regulation is preempted).
Defendants believe that Plaintiffs seek to “enforce” their
PEMS testing “standard” on the RAM Trucks over the EPA testing
that resulted in the EPA’s approval of the Engines. ECF No. 67,
PageID.9708–9709 (citing Engine Mfrs. Ass’n v. S. Coast Air
Quality Mgmt. Dist., 541 U.S. 246, 252–53 (2004) (defining
“standard” broadly to include “that which is established by
authority, custom, or general consent”)). Defendants go on,
27

“Plaintiffs… [are attempting] to rewrite the EPA’s emissions
regulations by replacing the EPA’s criteria with Plaintiffs’ criteria,
and the EPA’s certification testing standards with Plaintiffs’
preferred tests.” ECF No. 67, PageID.9709.
Plaintiffs' claims do not depend on proof of noncompliance
with federal emissions standards. See Counts v. Gen. Motors, Inc.,
2017 WL 1406938 at *2 (E.D. Mich. Apr. 20, 2017) (“Counts II”)
(citing Counts I, 237 F. Supp. 3d at 595) . As in Counts I, Plaintiffs
here “are not attempting to tighten emissions regulations or
introduce separate state emissions regulation.... Rather, Plaintiffs
are attempting to hold [defendants] responsible for what Plaintiffs
allege are false representations about certain technology in the
[trucks].” Counts I, 237 F. Supp. 3d at 592 (E.D. Mich. 2017).
Accordingly, Plaintiffs claims here are not preempted by the CAA.
1. Plaintiffs adequately pleaded the elements of state
consumer protection and fraudulent concealment
laws and these claims are not preempted by the CAA
Defendants’ opposition on this point as they relate to
Plaintiffs’ allegations of violations of state consumer protection and
fraudulent concealment laws is based on a misapprehension of
Plaintiffs’ claims. Plaintiffs allege that Defendants fraudulently
concealed or misrepresented the functionality and effectiveness of
the relevant trucks, which was substantially lower than a
28

reasonable customer would expect. ECF No. 62; See Counts II. ,
2017 WL 1406938 at *2. Plaintiff’s claim is that Defendants
installed a “defeat device” in the trucks to create “the appearance
of low emissions without the reality of low emissions,” and that the
very nature of a “defeat device” is such that it is meant to be
concealed from regulators and consumers alike. Counts II, 2017 WL
1406938 at *2.
Plaintiffs allege violation of the state consumer protections
laws of every state and the District of Columbia. As summarized in
the SAC, those State consumer protection laws generally prohibit,
“[u]nfair, unconscionable, or deceptive methods, acts, or
practices in the conduct of trade or commerce,” …
including: “(c) Representing that goods or services have
… characteristics … that they do not have;” … “(e)
Representing that goods or services are of a particular
standard … if they are of another;” … “(i) Making false
or misleading statements of fact concerning the reasons
for, existence of, or amounts of price reductions;” … “(s)
Failing to reveal a material fact, the omission of which
tends to mislead or deceive the consumer, and which fact
could not reasonably be known by the consumer;” …
“(bb) Making a representation of fact or statement of fact
material to the transaction such that a person
reasonably believes the represented or suggested state
of affairs to be other than it actually is;” … and “(cc)
Failing to reveal facts that are material to the
transaction in light of representations of fact made in a
positive manner.”

29

ECF No. 62, PageID.8509 (citing MICH. COMP. LAWS § 445.903(1)).
Plaintiffs allege that Defendants willfully concealed the presence of
a “defeat device” which rendered the trucks more environmentallyharmful and less fuel-efficient than the advertisements they
propagated, advertisements which induced reasonable consumers
to purchase the trucks based on promises of cleanliness and
efficiency. These well-pleaded allegations plausibly allege a scheme
by defendants to intentionally misrepresent material aspects of the
trucks in violation of state consumer protection laws.
Similarly, plaintiffs have plausibly pleaded claims of
fraudulent concealment, because manufacturers have a duty to
disclose7 all AECDs, and because Plaintiffs allege that Defendants
had exclusive knowledge of the “defeat devices” but actively
concealed them, knowing they would be material to consumers’
considerations. See Counts II, 2017 WL 1406938 at *2 (“[I]n at least
some states, a duty to disclose [the presence of a “defeat device”]
arises when the defendant has exclusive knowledge of … or actively
conceals [the “defeat device.”]”). Plaintiffs have adequately pleaded
Under the CAA, it is a violation “for any person to . . . install, any part or
component intended for use with, or as part of, any motor vehicle or motor
vehicle engine, where a principal effect of the part or component is to bypass
defeat or render inoperative any device or element of design installed on or in
a motor vehicle or motor vehicle engine in compliance with regulations under
this subchapter, and where the person knows or should know that such part or
component is being . . . installed for such use or put to such use.” 42 U.S.C. §
7522(a)(3)(B).

7

30

enough factual matter to make their claims that Defendants
violated state consumer protection and fraudulent concealment
laws rise to the level of plausibility. Defendant’s Motions to Dismiss
are DENIED as they pertain to Plaintiffs’ state law consumer
protection and fraudulent concealment claims.
2. Plaintiffs Plausibly State a Claim for Breach of
Contract
Plaintiffs allege breach of contracts claims again defendant
FCA only. Plaintiffs allege that “each and every sale of a Polluting
Vehicle constitutes a contract between FCA and the purchaser or
lessee.” ECF No. 62, PageID.8521–8522. Plaintiffs believe that FCA
breached their contract with consumers by “selling or leasing to
Plaintiffs and the other Subclass members defective Polluting
Vehicles and by misrepresenting or failing to disclose that the NOx
reduction system in the Polluting Vehicles turns off or is limited
during normal driving conditions, and is thus less valuable than
vehicles not equipped with the Adsorber Engine.” ECF No. 62,
PageID.8521–8522.8

Plaintiffs

allege

that

FCA’s

“misrepresentations and omissions…caused Plaintiff and the other
Subclass members to make their purchases or leases of their
Polluting Vehicles.” ECF No. 62, PageID.8521. Absent those

Plaintiffs repeat the same claim verbatim under the breach of contract law
for each state. The Court cites only to their first usage of this claim.
8

31

misrepresentations, Plaintiffs and Subclass members would have
chosen to purchase different vehicles entirely, or possibly pay less
for these vehicles. ECF No. 62, PageID.8521. Plaintiffs allege that
they have contractual privity with FCA through “sufficient direct
dealings with either FCA or its agents (e.g., dealerships and
technical support) [.]” ECF No. 62, PageID.8506. However,
Plaintiffs also assert that “privity is not required here because
Plaintiffs and each of the other Class members are intended thirdparty beneficiaries of contracts between FCA and its dealers[.]”
ECF No. 62, PageID.8506.
Defendant FCA does not address Plaintiffs’ state law breach
of contract claims directly. Rather, in a footnote, they claim “There
are several additional grounds on which to dismiss the remainder
of Plaintiffs’ claims, including that Plaintiffs do not plead … any
contract with FCA that could be breached[.]” ECF No. 68,
PageID.10256 at n.2.
Defendant seeks to incorporate its argument from their
previous Motion to Dismiss, in which they claimed that Plaintiff’s
failed to allege they purchased their trucks from FCA directly, as
opposed to third party dealerships. FCA’s First Motion to Dismiss,
ECF No. 27, PageID.3587; PageID.3627. Doing so would not be
entirely fair, because it would effectively permit Defendant to
exceed the 60-page limit the Court established in the previous
32

round of motions to dismiss. See May 27, 2017 Text Only Order
(granting 60 page limit for Defendants’ Motions to Dismiss); also
ECF No. 33 (stipulated order granting page extensions for
opposition and reply briefs). However, the Court will address the
arguments made in Defendant’s first Motion to Dismiss so as to
explain why they fail.
Defendants say that without direct contractual privity, there
can be no contractual breach. ECF No. 27, PageID.3626.
Defendants also say that Plaintiffs failed to allege “which specific
provisions of such contracts that FCA supposedly breached.” ECF
No. 27, PageID.3627. Defendant refers frequently to the Counts I
decision, in which that plaintiff’s similar breach of contract claim
was dismissed. However, in that case, plaintiff conceded that they
failed to adequately plead their claim, and the court’s decision
contained no analysis of privity or breach. For that reason, the
Counts I decision as it pertains to breach of contract is of limited
use here.
Defendants also cite to Harris, an unpublished decision which
says, “[i]t is a basic tenet of contract law that a party can only
advance a claim of breach of written contract by identifying and
presenting the actual terms of the contract allegedly breached.”
Harris v. Am. Postal Workers Union, 1999 WL 993882, at *4 (6th
Cir. Oct. 19, 1999).
33

Plaintiffs allege in their SAC that, “On or about September 7,
2007, [James Bledsoe] purchased a 2007 Dodge Ram 2500…, in
Merced,

California.”

ECF

No.

62,

PageID.8353.

Similar

representations follow for each named plaintiff.9 In the instant
case, the “contract” is the sale of the vehicle. Elecromotive Div. of
Gen. Motors Corp. v. Transportation Sys. Div. of Gen. Elec. Co., No.
CIV. 03-70940, 2004 WL 3550145, at *7 (E.D. Mich. July 28, 2004)
(quoting In re Caveney, 761 F.2d 671, 675 (Fed. Cir. 1995) (“It is
well settled that a sale is a contract between parties to give and to
pass rights of property for consideration which the buyer pays or
promises to pay the seller for the thing bought or sold.”)). Plaintiffs
has adequately pleaded that named plaintiffs purchased their
vehicles on the basis of multiple advertising from Defendants as to
the low-emissions and high fuel economy of the vehicles. What’s
more, Plaintiff’s allegation is that Defendants knowingly installed
and caused to operate a device whose only purpose was to
circumvent the regulatory safeguards in place for emissions and
fuel economy. Taken as true, this well-pleaded allegation

Though it is implied by the very nature of Plaintiffs’ claims, Plaintiffs do not
clearly and straight-forwardly allege that they purchased their trucks either
new, or from an FCA-approved dealership, as opposed to pre-owned or through
a private sale. This issue is more appropriate to be explored through the
process of discovery, however, and the Court will not dismiss these claims on
the basis of an imperfect pleading, when the remainder of the claims are wellpleaded and plausible.
9

34

establishes that consumers received a product other than the one
for which they bargained consideration, thereby plausibly stating a
claim for breach of contract.
d. Racketeer Influenced and Corrupt Organizations Act
Plaintiffs allege that the Defendants are “persons” under 18
U.S.C. § 1961(3) because they hold a “legal or beneficial interest in
property.” ECF No. 62, PageID.8490. Plaintiffs further allege that
Defendants,
along with other entities and individuals, were
employed by or associated with, and conducted or
participated in the affairs of, one or several RICO
enterprises (the “Emission Fraud Enterprise”), whose
purpose was to deceive regulators and the driving public
into believing that the Class Vehicles were complaint
with
emissions
standards,
“clean,”
and
“environmentally friendly” so as to increase revenues
and minimize losses from the design, manufacture,
distribution, and sale of the Class Vehicles and the
defective catalyst devices installed therein. As a direct
and proximate result of their fraudulent scheme and
common course of conduct, Defendants were able to
extract revenues of billions of dollars from Plaintiffs and
the Class.
ECF No. 62, PageID.8490–8491. Plaintiffs claim that this behavior
violates 18 U.S.C. § 1962 (c)&(d). Among other things, section 1962
(c)&(d) makes it unlawful for a person or enterprise engaging in
interstate commerce to participate in “racketeering activity,” either
directly or indirectly. “Racketeering activity” can be predicated by
35

involvement with numerous acts, but Plaintiffs allege here that
Defendants “committed, conspired to commit, and/or aided and
abetted in the commission of two predicate acts”: mail fraud (18
U.S.C. §1341) and wire fraud (18 U.S.C. § 1343). ECF No. 62,
PageID.8497.
Plaintiffs allege that “each of the RICO Defendants
constitutes a single legal entity “enterprise” within the meaning of
18 U.S.C. §1961(4) … through which [they] conducted their pattern
of racketeering activity in the U.S.” ECF No. 62, PageID.8491.
Plaintiffs also allege that, with the assistance of unknown third
parties, the “association-in-fact enterprise engaged in interstate
and foreign commerce,” for the purpose of obtaining EPA
certificates of conformity and CARB Executive Orders so that FCA
could sell vehicles it knew to contain a “defeat device.” ECF No. 62,
PageID.8491.
Plaintiffs allege that Defendants committed the predicate act
of mail fraud when they “sent and/or received, materials via U.S.
Mail or commercial interstate carriers for the purpose of executing
the unlawful scheme to design, manufacture, market, and sell the
Class Vehicles by means of false pretenses, misrepresentations,
promises, and omissions.” ECF No. 62, PageID.8498.
Plaintiffs allege that Defendants committed the predicate act
of wire fraud “by causing to be transmitted and/or received,
36

materials by wire for the purpose of executing the unlawful scheme
to

defraud

and

obtain

money

on

false

pretenses,

misrepresentations, promises, and omissions.” ECF No. 62,
PageID.8498. Plaintiffs then proceed to catalog what they believe
are examples of Defendants’ use of the mails and wires (including
the transmission, delivery and shipment of the following) by the
RICO Defendants that were foreseeably caused to be sent as a
result of Defendants’ illegal scheme:
a.

b.

c.
d.
e.
f.
g.
h.
i.

Application for certificates submitted to the EPA
and CARB and Approved Applications received in
the mail on April 9, 2008, June 23, 2008, June 6,
2008, and July 2, 2008.
Applications submitted to the EPA and CARB for
each model year as follows:
• 2007–2010 Dodge Ram 2500 with Cummins
diesel (2WD, 4WD);
• 2011–2012 Dodge Ram 2500 with Cummins
diesel (non-SCR systems, 2WD, 4WD);
• 2007–2010 Dodge Ram 3500 with Cummins
diesel (2WD, 4WD); and
• 2011–2012 Dodge Ram 3500 with Cummins
diesel (non-SCR systems, 2WD, 4WD).
The Polluting Vehicles.
The Adsorber Engines.
The essential hardware for the Polluting Vehicles.
False and misleading emissions tests.
Additional fraudulent applications for COCs and
EOs.
Fraudulently obtained COCs and EOs.
Vehicle registrations and plates as a result of the
fraudulently obtained EPA COCs and EOs.
37

j.
k.

l.

m.
n.
o.
p.

False or misleading communications to the public
and to regulators.
Sales and marketing materials, including
advertising,
websites,
product
packaging,
brochures, and labeling, which misrepresented,
falsely promoted, and concealed the true nature of
the Polluting Vehicles.
Documents intended to facilitate the manufacture
and sale of the Polluting Vehicles, including bills
of lading, invoices, shipping records, reports and
correspondence.
Documents to process and receive payment for the
Class Vehicles by unsuspecting Class members,
including invoices and receipts.
Payments to Cummins.
Deposits of proceeds.
Other documents and things, including electronic
communications.

ECF No. 62, PageID.8498–8499. Plaintiffs allege that Defendants
used U.S. Mail, interstate facsimile, and interstate electronic mail
with various other affiliates, regional offices, divisions, dealerships
and other third-party entities in furtherance of a scheme to deceive
regulators and consumers and lure consumers into purchasing
vehicles the Defendants knew emitted illegal amounts of pollution,
despite their advertising campaign that the Class Vehicles were
“clean” diesel cars. ECF No. 62, PageID.8500.
Plaintiffs further allege that each of the Defendants also
constitutes a single, legal entity “enterprise” under 18 U.S.C.
§1961(4), “through which the RICO Defendants conducted their
pattern of racketeering activity in the U.S.” ECF No. 62,
38

PageID.8491. Plaintiffs say that because “FCA and Cummins
jointly designed, manufactured, and sold the Polluting Vehicles,
and FCA obtained COCs and the EOs through material
misrepresentations and omissions,” both FCA and Cummins
participated directly or indirectly in the enterprise. ECF No. 62,
PageID.8492.
1. Plaintiffs’ pleading satisfies Rule 9(b) and
adequately alleges predicate crimes of mail fraud
and wire fraud
Defendants claim that Plaintiffs have failed to allege the
underlying predicate acts with particularity, that defendant
Cummins acted with the requisite scienter, or that there are facts
showing Cummins was the proximate cause of Plaintiffs’ alleged
harm. ECF No. 67, PageID.9656. Defendants further claim that
Plaintiffs did not plead a “cognizable injury” to business or
property, nor any predicate acts of mail or wire fraud. ECF No. 68,
PageID.10287.
Both Defendants argue that Plaintiffs must meet a
heightened pleading standard under Rule 9(b) for their RICO
predicate allegations. ECF No. 68, PageID.10267–10268 (citing
FED. R. CIV. P. 9(b); Minger v. Green, 239 F.3d 793, 800 (6th Cir.
2001)); ECF No. 67, PageID.9693–9694 (quoting Advocacy Org. for
Patients and Providers v. Auto Club Ins. Ass’n, 176 F.3d 315, 322
39

(6th Cir. 1999) (“[Rule 9(b) requires] plaintiff, at a minimum, to
allege the time, place, and content of the alleged misrepresentation
on which he or she relied; the fraudulent scheme; the fraudulent
intent of the defendants; and the injury resulting from the fraud.”)).
Plaintiffs respond, “Rule 9(b) does not require omniscience;
rather the Rule requires that the circumstances of the fraud be pled
with enough specificity to put defendants on notice as to the nature
of the claim.” ECF No. 70, PageID.11504 (quoting Duramax, 298 F.
Supp. 3d at 1055–1056 ). The Duramax court went on, that, “[in] a
complex case, involving multiple actors and spanning a significant
period of time, where there has been no opportunity for discovery,
the specificity requirements of Rule 9(b) [should] be applied less
stringently.” ECF No. 70, PageID.11504 (quoting Duramax, 298 F.
Supp. 3d at 1055–1056 (punctuation omitted)). Plaintiffs assert
that Defendants “have notice of the who (Defendants), the what
(they designed and installed an engine designed to appear one way
on lab tests, but act another on the road), and the when (Defendants
jointly designed, manufactured, and sold the Vehicles, and FCA
obtained the necessary certifications to introduce the Vehicles into
the stream of commerce),” and that such notice satisfies Rule 9(b)’s
pleading

requirement.

ECF

No.

70,

PageID.11503–11504

(emphasis in original). At this stage, such pleading is sufficient.

40

2. Some of Defendants’ statements about the Trucks
are more than mere puffery and are not preempted
Defendants claim that all of their public statements and
advertising are either irrelevant, mere “puffery,” or are preempted.
ECF No. 68, PageID.10278 (“the alleged misstatements are either
puffery or preempted (or both)”). Defendants say that statements
extolling the Trucks as “so good, so powerful, so clean” or “the
cleanest” or “a model of cleanliness” are “precisely the type of
[i]nherently subjective statements about cleanliness, or promises of
reliability that the Sixth Circuit has held cannot form the basis for
a fraud claim[.]” ECF No. 68, PageID.10279 (citing Seaton v.
TripAdvisor LLC, 728 F.3d 592, 598 (6th Cir. 2013) (quotation
marks omitted); Ram Int’l Inc. v. ADT Sec. Servs., Inc., 2011 WL
5244936, at *6 (E.D. Mich. Nov. 3, 2011) (Edmunds, J.) (statement
that a product is “efficient” or “reliable” is inactionable puffery),
aff’d, 555 F. App’x 493 (6th Cir. 2014)). Defendants point also to the
Counts I decision, which found that “GM’s representations about
the ‘high quality’ and ‘safety’ of its vehicles,” including statements
about

the

Cruze’s

performance,”
subjective”

or

and

“more
“90%

efficient
less

“nonquantifiable”

combustion,”

emissions”
and

were

therefore

“improved
“inherently
inactionable

puffery.” ECF No. 68, PageID.10280 (citing Counts I, 237 F. Supp.
3d at 598–99).
41

The Counts I decision was focused on whether statements
made in advertising were “quantifiable.” That court pithily
captured the essence of puffery when it observed, “[u]nlike claims
about candlepower or battery life, assertions that a product has
“90% less emissions” raises the question: 90% less than what?”
Counts I237 F. Supp. 3d at 598. “[T]he more general the assertions,
the more likely they are to be considered puffery.” Id. at 597 (citing
Cook, Perkiss & Liehe, Inc. v. N. California Collection Serv. Inc.,
911 F.2d 242, 246 (9th Cir. 1990)). Accordingly, when assertions
include specific numerical representations, they are more likely to
rise above puffery, but numbers alone are not enough. Compare
Smith–Victor Corp. v. Sylvania Elec. Prods., Inc., 242 F. Supp. 302,
308–09 (N.D. Ill. 1965) (statements like “far brighter than any lamp
ever before offered for home movies” were puffery, but statements
promising “35,000 candlepower and 10–hour life” were actionable)
with Tietsworth v. Sears, Roebuck & Co., No. 5:09-CV-00288
JFHRL, 2009 WL 3320486, at n. 5 (N.D. Cal. Oct. 13, 2009) (claim
that a machine would save “at least 47% less water and 53% less
energy” was puffery despite being numerically quantifiable). The
focus in determining whether quantification lifts a claim above
puffery is whether the claim “impl[ies] independent corroboration.”
Counts I, 237 F. Supp. 3d at 597. There is not a bright line, but a
“slippery slope on the continuum between numerical claims that
42

imply independent corroboration and numerical claims involving
mere puffery.” Counts I, 237 F. Supp. 3d at 598 (quoting Avon
Prods., Inc. v. S.C. Johnson & Son, Inc., No. 94CIV3958(AGS), 1994
WL 267836, at *7 (S.D.N.Y. June 15, 1994) (claim that a product
was “100 times” better than a competitor's was puffery)).
Many of Defendants’ claims on their own are simply touting
the “cleanliness” of their vehicles, which is well-established puffery.
Counts v. Gen. Motors, LLC, 237 F. Supp. 3d 572, 598 (E.D. Mich.
2017). But some of their claims rose above this, and made
quantifiable promises such as meeting the 2010 emissions
standards three years early. ECF No. 62, PageID.8411–8412; Exh.
14, ECF No. 62-15. This number is quantifiable because the 2010
emissions standards were an ascertainable and specific goal.
Claiming to have met the standard early is not the same as alleging
having met specific amount of emissions—rather, it is saying that
these trucks performed at least as well as the 2010 standards.
Plaintiffs claim is that, in real driving conditions, the trucks never
meet those 2010 standards. Only when the “defeat device”
recognizes that the truck is being tested for compliance does the
truck meet the 2010 standards, as advertised by Defendants.
Defendants sought to specifically highlight the clean emissions of
these trucks, because they knew that this was a selling point for
consumers.
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Defendants’ individual statements along the lines that the
trucks are the cleanest or best in the world are nonactionable
puffery. But Defendants’ statements that the trucks meet an
ascertainable and quantifiable standard for fuel efficiency and
emissions set in place by a third-party regulator (implying
independent corroboration) rise above nonactionable puffery. See
Counts I, 237 F. Supp. 3d at 598; see also Duramax, 298 F. Supp.
3d at 1086 (“to the extent Defendants may have had no duty to
disclose the operation of the Duramax engine’s emissions
technology in the abstract, a duty arose when they created the
appearance that it was a ‘clean diesel’ engine.”). The Duramax court
found that defendant’s “extensive advertising which emphasized
the low emissions and environmentally-friendly nature of its ‘clean
diesel’ engine underscores” that defendant’s understanding that the
“level of emissions produced by a diesel engine was a material
consideration for consumers purchasing a vehicle.” Duramax, 298
F. Supp. 3d at 1084. As such, “regardless of whether these
advertisements would be actionable on their own, they were
material to the scheme.” Id. Likewise here, Plaintiffs allege that
Defendants made many statements which, on their own, were
nothing more than puffery. But since these statements reflected
Defendants’ understanding that emissions and fuel efficiency were
important considerations for consumers, they are material to
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showing that Defendants’ knowingly defrauded consumers by
installing a “defeat device” in the trucks, as Plaintiffs allege.
A civil RICO suit may be brought by “[a]ny person injured in
his business or property by reason of a violation of section 1962 of
this chapter.” 18 U.S.C. § 1964(c). A party advancing a civil RICO
claim must allege the following elements: “(1) conduct (2) of an
enterprise (3) through a pattern (4) of racketeering activity.”
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985); Duramax,
298 F. Supp. 3d at 1066–67 (quoting Heinrich v. Waiting Angels
Adoption Servs., Inc., 668 F.3d 393, 404 (6th Cir. 2012)). In this
case, Plaintiffs have adequately pleaded these elements, alleging
that Cummins and FCA formed an enterprise that engaged in
fraudulent representations regarding the emissions and fuel
economy of the Trucks to both consumers and regulators, for the
ultimate purpose of selling more vehicles than either or both
Defendants would otherwise be able. Plaintiffs have satisfied the
Rule 9(b) requirements, and have identified advertising language
that was specific and quantifiable enough to rise above “mere
puffery.” Defendant’s motions to dismiss Plaintiffs’ RICO claims are
DENIED.
e. Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act (“MMWA”) provides a
private right of action for any consumer who is damaged when a
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warrantor fails to comply with a warranty. 15 U.S.C. § 2301, et seq.
In their first amended complaint, Plaintiffs alleged that defendants
violated the MMWA, but did not allege any underlying state law
warranty claims. See Am. Complaint, ECF No. 22, PageID.1601–
04. Plaintiffs previously conceded that the MMWA section of their
first amended complaint was deficient and requested leave to
amend this portion of their complaint. See Resp. to First Motions to
Dismiss, ECF No. 34, PageID.4834–35. This Court agreed, and
expected Plaintiffs to correct this deficiency in the second amended
complaint. See, generally, Op. and Order, ECF No. 60.
Defendants’ allege in their motions that Plaintiffs again failed
to adequately plead MMWA claims in the SAC, for the same reason
as before. In their response to defendants’ motions, Plaintiffs agree,
saying, “Plaintiffs concede that the SAC should be amended to
allege underlying state law warranty claims and respectfully
request leave from the Court to do so.” Plaintiff’s Resp., ECF No.
70, PageID.11522. Plaintiffs do not provide any explanation for why
they have failed to correct this deficiency, nor why three separate
complaints were not sufficient for them to adequately articulate
facts in support of the MMWA claim. The Court DENIES Plaintiff’s
request for leave to amend their second amended complaint in order
to fix this long-known deficiency. The Court will therefore GRANT
Defendants’ motions to dismiss as they pertain to claims that
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Defendants violated the Magnuson Moss Warranty Act, and
dismiss Plaintiffs’ MMWA claims with prejudice.
VI.

Conclusion
For the reasons above, Defendants’ Motions to Dismiss (ECF

Nos. 67, 68) are
DENIED as they pertain to violations of the Racketeer
Influenced and Corrupt Organizations Act (Count I of federal
statute allegations);
DENIED as they pertain to violations of consumer protection
(Count I of state statute allegations), fraudulent concealment
(Count II of state statute allegations),

and breach of contract

(Count III of state statute allegations), brought under the laws of
all 50 states and the District of Columbia;
GRANTED as they pertain to violations of the MagnusonMoss Warranty Act (Count II of federal statute allegations), with
prejudice.
IT IS SO ORDERED.

Dated: March 27, 2019

s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE

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Certificate of Service
I hereby certify that this Order was electronically submitted
on March 27, 2019, using the CM/ECF system, which will send
notification to each party.
s/Amanda Chubb
Case Manager

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