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In re FCA U.S. LLC Monostable Electronic Gearshift Litigation

United States District Court, E.D. Michigan, Southern Division

April 18, 2017

IN RE FCA U.S. LLC MONOSTABLE ELECTRONIC GEARSHIFT LITIGATION MDL MDL No. 2744

          Magistrate Judge, David R. Grand

          OPINION AND ORDER DENYING MOTION TO DISMISS FOR LACK OF SUBJECT MATER JURISDICTION

          DAVID M. LAWSON, UNITED STATES DISTRICT JUDGE

         The plaintiffs have filed a first amended consolidated master class action complaint (FACMC) in this multidistrict litigation proceeding, which addresses the claims of all the named plaintiffs and absent putative class members who allege economic loss, but do not allege a personal physical injury. The defendant has filed a motion under Federal Rule of Civil Procedure 12(b)(1) arguing that the plaintiffs have not alleged facts establishing the injury-in-fact component of standing under Article III, and therefore the Court does not have subject matter jurisdiction. The defendants also argue that the Court lacks subject matter jurisdiction over the claims for equitable relief because they are preempted by the Motor Vehicle Safety Act. The Court heard oral argument on April 12, 2017. The motion will be denied, because the FACMC pleads adequate facts to establish an injury in fact, and preemption will not deprive the Court of subject matter jurisdiction.

         I.

         The FACMC consolidates several civil actions filed in various districts alleging defects in vehicles manufactured by defendant FCA U.S. LLC (commonly referred to as Fiat Chrysler Automotive, Chrysler, or FCA) that are equipped with “monostable electronic gearshifts.” The plaintiffs contend generally that the vehicles are defective because they do not shift into “Park” properly, and rollaway incidents can and have resulted as a consequence. The FACMC targets the 2012-2014 Chrysler 300, 2012-2014 Dodge Charger, and 2014-2015 Jeep Grand Cherokee equipped with a monostable electronic gearshift supplied by ZF Friedrichshaffen AG (these will be designated as “the class vehicles”). The parties generally agree that the shifter design does not use a lever that moves physically to different positions, but instead is pushed in a direction by the driver, and then springs back to its original position after a gear is selected. The only indication that the car has changed gears or is in a particular gear is a lighted indicator that changes to display letters such as “D” for “Drive” or “P” for “Park.” The class vehicles, when sold to the plaintiffs, also did not have any mechanism to automatically shift the car to “Park” when the driver exits the car while it is in another gear.

         In its motion, the defendant characterizes the FACMC as alleging that the class vehicles are defective because they have no “auto park” feature. Chrysler reads the complaint as translating that “defect” into “allegations of harms suffered by unidentified putative class members and anonymous persons who submitted unsubstantiated incident reports to the National Highway Transportation Safety Administration (‘NHTSA').” It believes that the pleading is bereft of facts that support the five categories of harm the plaintiffs allege, which Chrysler understands to be (a) loss of the benefit of the bargain for class vehicle purchasers, (b) incidental and consequential damages incurred when obtaining recall repairs, (c) suffering a rollaway incident, (d) diminished functionality as a result of the recall, and (e) increased rates of vehicle depreciation (mostly for the Grand Cherokee models).

         The FACMC, of course, pleads much more than that. According to the plaintiffs, it is the lack of a physical indication of the gear selected, together with the absence of an “auto park” feature, that has caused numerous incidents in which a driver got out of his or her car, thinking that it was safely in “Park” when it was not, leading to accidents where cars rolled away down sloped streets or driveways, sometimes over the driver or others, resulting, in some cases, in serious personal injuries or property damage. (However, the plaintiffs named in the FACMC are those who allege economic losses only as a result of the defect; the claims of plaintiffs who suffered personal injuries from “rollaway” accidents involving the class vehicles are comprised in a separate complaint.) As of February 2016, NHTSA had identified more than 300 rollaway incidents involving class vehicles, with 121 of those involving crashes, and 30 resulting in personal injuries. FACMC ¶ 6. Also, NHTSA has logged more than 325 additional complaints from drivers whose cars had problems shifting into “Park.” The NHTSA investigated the defect and concluded that “[d]rivers may exit the vehicle when the engine is running and the transmission is not in Park, resulting in unattended vehicle rollaway, ” and “[r]ollaway incidents may result in serious injuries to the driver or passengers as they exit the vehicle or to other pedestrians in the path of the rolling vehicle.” Id. ¶ 7. NHTSA determined that the design of the defective shifter violated several basic guidelines for motor vehicle control and operation, and that it provided poor feedback to drivers about the currently selected gear and whether the vehicle was safely parked.

         The plaintiffs allege that FCA knew about the defects in the shifter since at least 2011, when the affected vehicles first went to market, but it took no steps to address the defect until it issued a voluntary recall in April 2016. In May 2016, FCA sent affected owners a letter explaining the problems and risks with the shifter design, but stated only that it was working on a solution to be released near the end of 2016. The NHTSA report of the voluntary recall stated that FCA had assessed the cause and risks that led to the recall as follows:

Drivers erroneously concluding that their vehicle's transmission is in the PARK position may be struck by the vehicle and injured if they attempt to get out of the vehicle while the engine is running and the parking brake is not engaged. FCA U.S. has therefore determined that the absence of an additional mechanism to mitigate the effects of driver error in failing to shift the monostable gear selector into PARK prior to exiting the vehicle constitutes a defect presenting a risk to motor vehicle safety.

FACMC, Ex. F, Recall Report dated May 24, 2016 (Pg ID 2971). The plaintiffs assert that in the meantime, because there was no remedy immediately available to fix the defect, they were left with the alternatives of either driving a dangerous vehicle, or not driving their cars at all. The recall notice ultimately affected more than 800, 000 vehicles in the United States. FCA also later phased out the problematic shifter design starting with the 2016 model year.

         On June 20, 2016, the problems with the shifter design became a subject of widespread public attention when news sources “reported that a young Hollywood actor, Anton Yelchin, was crushed to death when his 2015 Jeep Grand Cherokee rolled backward down his driveway and pinned him against his mailbox after he exited the vehicle.” FACMC ¶ 17.

         On June 24, 2016, FCA notified owners of certain affected vehicles that they could bring their cars into an FCA dealer for a software update that would add an “auto park” feature, intended to “eliminate[] the possibility of the driver inadvertently failing to place the transmission into ‘PARK' prior to exiting the vehicle.” FACMC ¶ 19. However, the plaintiffs contend that the software fix was ineffective, and there have been numerous reports logged by NHTSA of vehicles having rollaway accidents after the fix was applied. Some owners have had to return to their dealers for a second purported fix, which also has not fully remedied the defect. According to published news reports, FCA has acknowledged that the fix was ineffective when applied to up to 13, 000 affected vehicles in the United States, and it has sent a second recall notice to affected owners directing them to return their vehicles to a dealer for further repairs. Id. ¶ 22. The plaintiffs allege that they have suffered losses in several ways as a result of the defect, the widespread reports of accidents caused by it, and the defendant's bungled attempts to fix it. In particular, they contend that they overpaid for cars they thought were safe, which were not; had to take time off from work and other obligations to accommodate the defendant's repeated failed attempts to fix their cars; and now own vehicles that have dropped in value much faster than previous similar models or competitor vehicles, due to the public perception that the cars are dangerous to own or drive. The plaintiffs allege in particular that, before new reports about the defective shifter surfaced, “2014 and 2015 Jeep Grand Cherokees held their value better than other cars in their class, ” but “after the defect stories became known, the monthly depreciation of these cars increased drastically, causing them to hold value worse than other cars in their class.” Id. ¶ 12.

         This multidistrict litigation was initiated on October 5, 2016 by an order of the Judicial Panel on Multidistrict Litigation (JPML) transferring to this Court for pretrial proceedings six civil actions pending in various districts. Subsequent orders by the JPML transferred more cases raising substantially the same claims, which all together comprise 11 putative class actions and 52 named plaintiffs who have pleaded, cumulatively, more than 140 counts under the laws of 28 states. Later transfer orders added eight cases raising claims by plaintiffs who assert that they suffered personal injuries as a result of the rollaway accidents; but, as noted above, those cases are not the subject of the FACMC or this motion.

         As part of the case management, the Court directed the plaintiffs to file a consolidated master complaint by December 23, 2016. They did so, but the Court struck that pleading and directed the plaintiffs to re-file it, after the defendant filed a motion challenging the naming of 17 new individuals who were not parties to any underlying transferred action. On March 24, 2017, the plaintiffs filed the present FACMC, raising claims under federal law and the law of 18 states for fraud, negligent misrepresentation, violation of The Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq., unjust enrichment, breach of express and implied contractual duties, breach of express and implied warranties, and violations of state consumer protection laws. The defendant ...


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