United States District Court, E.D. Michigan, Northern Division
IN RE DURAMAX DIESEL LITIGATION, ANDREI FENNER, et al, Plaintiffs,
GENERAL MOTORS, LLC, ROBERT BOSCH GMBH, and ROBERT BOSCH LLC, Defendants.
ORDER DENYING MOTIONS TO DISMISS AND DENYING MOTIONS
FOR LEAVE TO FILE SURREPLIES AS MOOT
L. LUDINGTON UNITED STATES DISTRICT JUDGE.
25, 2017, the original Plaintiffs (including the first-named
Plaintiff Andrei Fenner) filed a complaint against Defendant
General Motors LLC (“GM”), Robert Bosch GmbH, and
Robert Bosch LLC (“Bosch” and, collectively, the
“Defendants”). ECF No. 1. The suit was assigned
to United States District Judge George Caram Steeh. On July
25, 2017, Judge Steeh issued a stipulated proposed order
which consolidated the Fenner class action with
another class action (Carrie Mizell et al.
v. General Motors LLC, et al., No.
17-11984) also pending before him at the time. ECF No. 16.
Pursuant to that stipulated proposed order, the
“caption for the Consolidated Action” was
designated as “IN RE DURAMAX DIESEL LITIGATION.”
Id. at 3.
pursuant to that stipulated order, the Plaintiffs filed a
consolidated amended complaint on August 4, 2017. ECF No. 18.
On August 30, 2017, the consolidated case was reassigned
because it is a companion case to Counts et al.
v. General Motors, No. 1-16-cv-12541, which is
currently in discovery. ECF No. 33.
deadline for responsive pleadings, Defendants filed two
motions to dismiss the consolidated amended complaint. ECF
Nos. 44, 45. Defendants advance many arguments,
including that the Plaintiffs lack standing to sue, that
Plaintiffs have failed to state a claim for affirmative
misrepresentation, that any fraudulent concealment or
omission claims should be dismissed or stayed, and that
Plaintiffs have failed to state a Racketeering Influenced and
Corrupt Organizations Act (RICO) claim, 18 U.S.C. § 1961
et seq. For the following reasons, the motions to
dismiss will be denied.
well-pleaded factual allegations are assumed to be true at
the pleading stage. The consolidated amended complaint names
thirteen Plaintiffs residing in ten states. Each Plaintiff
bought a Silverado or Sierra 2500 or 3500 diesel vehicle with
a model year between 2011 and 2016. Con. Am. Compl. at 1, ECF
No. 18. Some Plaintiffs bought new vehicles and others bought
used vehicles, but each purchased their vehicle from an
authorized GM dealer. See, e.g., id. at 14.
The vehicles which Plaintiffs identify all contain a
“Duramax” diesel engine. Id. at 1.
Plaintiffs' allegations center on the emissions reduction
technology associated with that engine.
to Plaintiffs, GM represented the Duramax engine as providing
both low emissions and high performance.
Id. Plaintiffs (in unsourced quotations)
contend that GM boasted that the Duramax engine constituted a
“‘remarkable reduction of diesel
emissions'” compared to the engine previously used
in its Silverado and Sierra vehicles. Id. Those
representations were false. Plaintiffs allege that
scientifically valid emissions testing has revealed that the
Silverado and Sierra 2500 and 3500 models emit levels of NOx
many times higher than (i) their gasoline counterparts, (ii)
what a reasonable consumer would expect, (iii) what GM had
advertised, (iv) the Environmental Protection Agency's
maximum standards, and (v) the levels set for the vehicles to
obtain a certificate of compliance that allows them to be
sold in the United States.
other words, the Duramax engine does not actually combine
high power and low emissions as GM suggested: “[T]he
vehicles' promised power, fuel economy, and efficiency is
obtained only by turning off or turning down emissions
controls when the software in these vehicles senses they are
not in an emissions testing environment.” Id.
Duramax engine allegedly achieves this feat by employing
“defeat devices.” Id. at 2. As
Plaintiffs define that term, “[a] defeat device means
an auxiliary emissions control device that reduces the
effectiveness of the emission control system under conditions
which may reasonably be expected to be encountered in normal
vehicle operation and use.” Id. The Duramax
engine allegedly contains three such devices. Defeat Device
No. 1 “reduces or derates the emissions system when
temperatures are above the emissions certification test range
(86°F).” Id. at 3. Similarly, Defeat
Device No. 2 “operates to reduce emissions control when
temperatures are below the emissions certification low
temperature range (68°F).” Id. The impact
of these alleged devices is significant:
Testing reveals that at temperatures below 68°F (the
lower limit of the certification test temperature), stop and
go emissions are 2.1 times the emissions standard at 428
mg/mile (the standard is 200 mg/mile). At temperatures above
86°F, stop and go emissions are an average of 2.4 times
the standard with some emissions as high as 5.8 times the
third defeat device “reduces the level of emissions
controls after 200-500 seconds of steady speed operation in
all temperature windows, causing emissions to increase on
average of a factor of 4.5.” Id. Plaintiffs
estimate that “due to just the temperature-triggered
defeat devices, the vehicles operate at 65-70% of their miles
driven with emissions that are 2.1 to 5.8 times the
provide a technical explanation for how GM was able to
leverage these devices to “obtain and market higher
power and fuel efficiency from its engines while still
passing the cold-start emissions certification tests.”
Id. at 4. Essentially, GM placed the
“Selective Analytic Reduction (SCR) in front of the
Diesel Particulate Filter (DPF).” Id. In
doing so, GM increased the engine's power production and
fuel efficiency. However, placing the SCR in front of the DPF
also dramatically increased potential emissions, thus
requiring the engine to “employ Active Regeneration
(burning off collected soot at a high temperature) and other
power- and efficiency-sapping exhaust treatment
measures.” Id. Thus, the power and
fuel-efficiency gains were lost because of the increased need
for emissions reduction technology. GM's solution,
according to the Plaintiffs, was the three defeat devices
allege that, in developing this solution, “GM did not
act alone.” Id. at 10. Rather, Robert Bosch
GmbH and Robert Bosch LLC “were active and knowing
participants in the scheme to evade U.S. emissions
requirements” and to develop, manufacture, and test the
“electronic diesel control (EDC) that allowed GM to
implement the defeat device.” Id. The EDC in
question, Bosch's EDC17, “is a good enabler for
manufacturers to employ ‘defeat devices' as it
enables the software to detect conditions when emissions
controls can be derated--i.e., conditions outside of
the emissions test cycle.” Id. Importantly,
“[a]lmost all of the vehicles found or alleged to have
been manipulating emissions in the United States (Mercedes,
FCA, Volkswagen, Audi, Porsche, Chevy Cruze) use a Bosch
EDC17 device.” Id.
to a Bosch press release quoted by Plaintiffs, the EDC17
device controls “‘the precise timing and quantity
of injection, exhaust gas recirculation, and manifold
pressure regulation.'” Id. at 93. The
device also “‘offers a large number of options
such as the control of particulate filters or systems for
reducing nitrogen oxides.'” Id. EDC17 is
“run on complex, highly proprietary engine management
software over which Bosch exerts near-total control.”
Id. at 94. Because the software “is typically
locked to prevent customers, like GM, from making significant
changes on their own, ” vehicle manufacturers must work
closely with Bosch to implement EDC17 in a vehicle.
to Plaintiffs, “Bosch participated not just in the
development of the defeat device, but also in the scheme to
prevent U.S. regulators from uncovering the device's true
functionality.” Id. at 39. Additionally,
“Bosch GmbH and Bosch LLC marketed ‘clean
diesel' in the United States and lobbied U.S. regulators
to approve ‘clean diesel, ' another highly unusual
activity for a mere supplier.” Id. In short,
Plaintiffs believe that “Bosch was a knowing and active
participant in a massive, decade-long conspiracy with
Volkswagen, Audi, Mercedes, GM, and others to defraud U.S.
consumers, regulators, and diesel car purchasers or
lessees.” Id. at 40.
their complaint, Plaintiffs repeatedly reference allegedly
similar conduct by other automobile manufacturers. Plaintiffs
explain that, in recent years, “almost all of the major
automobile manufacturers rushed to develop ‘clean
diesel' and promoted new diesel vehicles as
environmentally friendly and clean.” Id. at 5.
Due in part to that marketing, a significant market for
“clean diesel” vehicles developed: “[O]ver
a million diesel vehicles were purchased between 2007 and
2016 in the United States and over ten million in
Europe.” Id. at 6. A number of those diesel
vehicle manufacturers, however, have now been accused of
installing “defeat devices” in their diesel
vehicles. Id. For example, Volkswagen has pleaded
guilty to criminal charges (and has settled civil class
action claims) arising out of allegations that it
purposefully evaded emission standards. Id. Fiat
Chrysler Automobiles has also been accused of similar
conduct. On January 12, 2017, the EPA “issued a Notice
of Violation to FCA because it had cheated on its emissions
certificates with respect to its Dodge Ram and Jeep Grand
Cherokee vehicles, and on May 23, 2017, the United States
filed a civil suit in the Eastern District of Michigan
alleging violations of the Clean Air Act.” Id.
gasoline engines, diesel engines “compress a mist of
liquid fuel and air to very high temperatures and pressures,
which causes the diesel to spontaneously combust.”
Id. at 46. When compared to gasoline engines, diesel
engines produce greater amounts of “oxides of nitrogen
(NOx), which includes a variety of nitrogen and oxygen
chemical compounds that only form at high
temperatures.” Id. See also Id. at 47.
According to Plaintiffs,
NOx pollution contributes to nitrogen dioxide, particulate
matter in the air, and reacts with sunlight in the atmosphere
to form ozone. Exposure to these pollutants has been linked
with serious health dangers, including asthma attacks and
other respiratory illnesses serious enough to send people to
the hospital. Ozone and particulate matter exposure have been
associated with premature death due to respiratory-related or
cardiovascular-related effects. Children, the elderly, and
people with pre-existing respiratory illness are at acute
risk of health effects from these pollutants. As a ground
level pollutant, NO2, a common byproduct of NOx reduction
systems using an oxidation catalyst, is highly toxic in
comparison to nitric oxide (NO). If overall NOx levels are
not sufficiently controlled, then concentrations of NO2
levels at ground level can be quite high, where they have
adverse acute health effects.
further allege that the EPA believes that NOx contributes to
increases in the amount of acid rain, water quality
deterioration, toxic chemicals, smog, nitric acid vapor, and
global warming. Id. at 113-114.
consolidated amended complaint, Plaintiffs repeatedly
reference the pollution standards promulgated by the EPA and
other entities. They allege that GM and Bosch conspired to
conceal the defeat devices in the Duramax engine from the EPA
and allege that, because of the defeat devices, the vehicles
in question do not comply with emission pollution standards,
despite being certified as conforming to those requirements.
See, e.g., Id. at 97-99. But Plaintiffs also allege
that “[t]his case is not based on these laws but on
deception aimed at consumers.” Id. at 5.
Plaintiffs contend that “a vehicle's pollution
footprint is a factor in a reasonable consumer's decision
to purchase a vehicle” and that GM's actions
demonstrate their understanding of that fact. As Plaintiffs
explain, GM crafted a marketing campaign, “intended to
reach the eyes of consumers, [which] promoted the Duramax
engine as delivering ‘low emissions' or having
‘reduced NOx emissions.' GM was acutely aware of
this due to the public perception that diesels are
‘dirty.'” Id. at 60.
consolidated amended complaint, Plaintiffs quote, summarize,
or reproduce approximately ten pages of GM advertising, press
releases, and publications related to the emissions
production and fuel economy of its diesel engines. See
Id. at 61-70. These advertisements and publications
repeatedly emphasize that the Duramax engine
“‘run[s] clean, '” delivers
“‘low emissions, '” and is
“‘friendlier to the environment.'”
Notably, not one of the advertisements or publications which
Plaintiffs reproduce in this section of the consolidated
amended complaint references EPA standards or represents that
the vehicle in question has been certified by the EPA.
allege that the disparity between the way the Duramax engine
was characterized as operating and the way in which its
emissions reductions systems were actually configured has
resulted in financial harm to them and other consumers.
See Id. at 116 (“As a result of GM's
unfair, deceptive, and/or fraudulent business practices, and
its failure to disclose that under normal operating
conditions the Polluting Vehicles are not “clean”
diesels, emit more pollutants than do gasoline-powered
vehicles, and emit more pollutants than permitted under
federal and state laws, owners and/or lessees of the
Polluting Vehicles have suffered losses.”).
Plaintiffs allege that they “paid a premium of nearly
$9, 000 [because] GM charged more for its Duramax engine than
a comparable gas car.” Id. at 115. Because the
Duramax engine did not reduce emissions to the level a
reasonable consumer would have expected, Plaintiffs allege
that they overpaid for the vehicle at the time of purchase.
Id. at 117. Plaintiffs also identify other damages
they have suffered:
Had Plaintiffs and Class members known of the higher
emissions at the time they purchased or leased their
Polluting Vehicles, they would not have purchased or leased
those vehicles, or would have paid substantially less for the
vehicles than they did. Moreover, when and if GM recalls the
Polluting Vehicles and degrades the GM Clean Diesel engine
performance and fuel efficiency in order to make the
Polluting Vehicles compliant with EPA standards, Plaintiffs
and Class members will be required to spend additional sums
on fuel and will not obtain the performance characteristics
of their vehicles when purchased. Moreover, Polluting
Vehicles will necessarily be worth less in the marketplace
because of their decrease in performance and efficiency and
increased wear on their cars' engines.
Id. at 117.
consolidated amended complaint includes fifty-four counts.
The first count alleges that the Defendants violated the RICO
statute. The remaining fifty-three counts are state law
claims predicated on the fraudulent concealment and consumer
protection laws of forty-three different states. Thirty-three
of the state law claims originate from states where no named
have moved for dismissal pursuant to Federal Rules of Civil
Procedure 8(a), 9(b), 12(b)(1) and 12(b)(6). Rule 8(a)(2)
mandates that pleadings, including complaints, must contain
“a short and plain statement of the claim showing that
the pleader is entitled to relief.” Id. Rule
9(b) requires a party allege fraud or mistake to “state
with particularity the circumstances constituting fraud or
mistake.” Id. Rule 9(b) also provides,
however, that “[m]alice, intent, knowledge, and other
conditions of a person's mind may be alleged
12(b)(1) provides the means by which a party may assert lack
of subject-matter jurisdiction as a defense. “A Rule
12(b)(1) motion for lack of subject matter jurisdiction can
challenge the sufficiency of the pleading itself (facial
attack) or the factual existence of subject matter
jurisdiction (factual attack).” Cartwright v.
Garner, 751 F.3d 752, 759 (6th Cir. 2014) (citing
United States v. Ritchie, 15 F.3d 592, 598 (6th
Cir.1994)). “A facial attack goes to the question of
whether the plaintiff has alleged a basis for subject matter
jurisdiction, and the court takes the allegations of the
complaint as true for purposes of Rule 12(b)(1)
analysis.” Id. However, a “factual
attack challenges the factual existence of subject matter
jurisdiction.” Id. In that case, “the
district court has broad discretion over what evidence to
consider and may look outside the pleadings to determine
whether subject-matter jurisdiction exists.”
Adkisson v. Jacobs Eng'g Grp., Inc., 790 F.3d
641, 647 (6th Cir. 2015). Regardless, “the plaintiff
bears the burden of proving that jurisdiction exists.”
DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir.
pleading fails to state a claim under Rule 12(b)(6) if it
does not contain allegations that support recovery under any
recognizable legal theory. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). In considering a Rule 12(b)(6) motion,
the Court construes the pleading in the non-movant's
favor and accepts the allegations of facts therein as true.
See Lambert v. Hartman, 517 F.3d 433, 439 (6th Cir.
2008). The pleader need not provide “detailed factual
allegations” to survive dismissal, but the
“obligation to provide the ‘grounds' of his
‘entitle[ment] to relief' requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007). In essence,
the pleading “must contain sufficient factual matter,
accepted as true, to state a claim to relief that is
plausible on its face” and “the tenet that a
court must accept as true all of the allegations contained in
a complaint is inapplicable to legal conclusions.”
Iqbal, 556 U.S. at 678-79 (quotations and citation
present motions to dismiss, Defendants argue that Plaintiffs
lack standing to bring suit, that the consolidated amended
complaint is impermissibly vague, that all of Plaintiffs'
claims are preempted, that any surviving claims should be
stayed, and that Plaintiffs have failed to state a cognizable
RICO claim. Those arguments will be addressed in roughly that
order. Before proceeding further, the Court must confirm its
jurisdiction. After analyzing jurisdictional issues, the next
question is whether the complaint is sufficiently clear and
specific to comply with federal pleading requirements. The
cognizability of Plaintiffs' claims involving the alleged
misrepresentation, concealment, or omission of material facts
is inextricably intertwined with the question of whether
those claims are preempted and the related question of
whether this suit should be stayed in favor of an EPA
investigation. Accordingly, those questions will be
considered together. Next, Defendants' arguments for
dismissal of the RICO claim will be considered. Finally, the
dispute over whether Plaintiffs lack standing to assert
claims premised on the laws of states where no named
Plaintiff resides will be addressed.
and Bosch have filed separate motions to dismiss. While the
two motions travel similar ground (and refer to and rely upon
each other), they also contain distinct arguments. An effort
will be made to specifically identify which Defendant's
arguments are being addressed and the impact of each
conclusion on each Defendant. However, one of the disputes is
whether the complaint is adequately specific in its
allegations about which Defendant took what action. For that
reason, some generalization will be inevitable.
courts have a duty to confirm subject matter jurisdiction in
every case pending before them. Valinski v. Detroit
Edison, 197 F. App'x 403, 405 (6th Cir. 2006).
Article III, § 2 of the U.S. Constitution limits federal
court jurisdiction to “Cases” and
“Controversies.” The doctrine derived from Art.
III, § 2 imposes the requirement of standing: federal
jurisdiction exists only if the dispute is one “which
[is] appropriately resolved through the judicial
process.” Whitmore v. Arkansas, 495 U.S. 149,
155 (1990). For standing to exist, three elements must be
satisfied: injury in fact, causation, and redressability.
Lujan v. Defs. of Wildlife, 504 U.S. 555,
560-61(1992). Injury in fact exists when the plaintiff has
suffered “an invasion of a legally protected
interest” that is both “concrete and
particularized” and “actual or imminent, ”
not “conjectural or hypothetical.” Id.
at 560 (citations omitted). Causation exists if the injury is
one “that fairly can be traced to the challenged action
of the defendant.” Simon v. E. Kentucky Welfare
Rights Org., 426 U.S. 26, 41 (1976). The redressability
requirement is satisfied if the plaintiff's injury is
“likely to be redressed by a favorable decision.”
Id. at 38. Standing can exist even if the alleged
injury “may be difficult to prove or measure.”
Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1549 (2016).
argues that the Plaintiffs lack Article III standing because
they have not identified an injury in fact which is traceable
to the actions of Bosch. GM has not briefed the question of
Article III standing, but has incorporated by reference
Bosch's brief on the issue. See GM Mot. Dismiss
at 16-17 n.18, ECF No. 45. Bosch identifies “two types of
injuries (1) alleged overpayment for their vehicles . . . and
(2) potential future injuries arising from potential
diminished performance.” Bosh Mot. Dismiss at 11. As
regards the overpayment theory, Bosch argues that the injury
cannot be fairly traced to Bosch's actions because Bosch
did not advertise the vehicles to consumers, did not
establish the price for the vehicles, and was not a party to
any vehicle-purchase contracts. As regards the potential for
diminished future performance, Bosch argues that this theory
is unduly hypothetical and speculative.
overpayment theory suffices to provide standing to sue GM,
which manufactured the vehicles and authorized their sale.
Accepting Plaintiffs' allegations as true, they paid a
premium for a “clean diesel” vehicle which
actually polluted at levels dramatically higher than a
reasonable consumer would expect. In other words, they paid
for a product which did not operate in the way they believed
it did. Claims of overpayment, wherein a plaintiff paid a
premium but did not receive the anticipated consideration,
are cognizable injuries in fact. See Wuliger v.
Manufacturers Life Ins. Co., 567 F.3d 787, 794 (6th Cir.
2009). See also Danvers Motor Co. v. Ford Motor Co.,
432 F.3d 286, 293 (3d Cir. 2005) (“Monetary harm is a
classic form of injury-in-fact.”). That injury is
traceable to GM's actions: GM developed the Duramax
engine (including the alleged defeat devices), marketed its
diesel vehicles as environmentally friendly, and set the MSRP
for its diesel vehicles. There is, accordingly, a
“‘traceable connection between the
plaintiff's injury and the complained-of conduct of the
defendant.'” Id. at 796 (quoting Steel
Co. v. Citizens for a Better Env't, 523 U.S. 83, 103
(1998)). And financial damages are, of course, fully
redressable by a favorable decision. Plaintiffs have standing
to sue GM.
connection to the alleged overpayment, however, is more
attenuated. Bosch did not manufacture the Duramax engine,
advertise vehicles containing that engine, or establish the
MSRP. Accordingly, Bosch argues that any overpayment by
Plaintiffs is attributable solely to GM's actions. That
assertion mischaracterizes the allegations in the
consolidated amended complaint. Plaintiffs allege that
Bosch participated not just in the development of the defeat
device, but also in the scheme to prevent U.S. regulators
from uncovering the device's true functionality.
Moreover, Bosch's participation was not limited to
engineering the defeat device (in a collaboration described
as unusually close). Rather, Bosch GmbH and Bosch LLC
marketed “clean diesel” in the United States and
lobbied U.S. regulators to approve “clean diesel,
” another highly unusual activity for a mere supplier.
Con. Am. Compl. at 39.
other words, “Bosch GmbH and Bosch LLC have enabled
over 1.3 million vehicles to be on the road in the United
States polluting at levels that exceed emissions standards
and which use software that manipulate emissions controls in
a manner not expected by a reasonable consumer.”
Id. at 40.
admits that it supplied components to the diesel vehicles in
question, but argues that it did not market those vehicles or
enter into any contractual relationships with any of the
Plaintiffs. As stated, however, that is not entirely true.
Plaintiffs allege that Bosch “marketed ‘clean
diesel' in the United States.” Id. at 39.
While the exact nature of that marketing is unclear, it is
plausible that Bosch's efforts contributed to the market
demand for “clean diesel” vehicles, generally, in
the United States. See Id. at 5-6. The premiums
which Plaintiffs paid for vehicles with Duramax engines were
a natural consequence of that market demand. Similarly,
Plaintiffs allege that Bosch enabled GM to deceive consumers
and thus contributed to the overpayment. Plaintiffs emphasize
the close relationship between GM and Bosch, including the
joint efforts to calibrate EDC17 for the Duramax engine. The
allegations in the consolidated amended complaint, if true,
clearly establish that Bosch developed the vehicle component
which has caused Plaintiffs' injury, that Bosch was aware
of the deception that component would inevitably contribute
to, and that Bosch was aware that consumers would pay a
premium for vehicle capabilities that the component would not
deliver. In other words, Plaintiffs overpaid for their
vehicles because Bosch worked closely with GM to
install working defeat devices in the Duramax vehicles.
can be no dispute that, compared to GM, Bosch has a more
indirect relationship with United States consumers. But
“[p]roximate causation is not a requirement of Article
III standing.” Lexmark Int'l, Inc. v. Static
Control Components, Inc., 134 S.Ct. 1377, 1391 n.6
(2014). Indeed, “the causation requirement in standing
is not focused on whether the defendant ‘caused'
the plaintiff's injury in the liability sense; the
plaintiff need only allege ‘injury that fairly can be
traced to the challenged action of the defendant, and not
injury that results from the independent action of some third
party not before the court.'” Wuliger, 567
F.3d at 796 (quoting Simon v. E. Ky. Welfare Rights
Org., 426 U.S. 26, 41-42 (1976)). Bosch may ultimately
prevail in its argument that it should not be held liable for
Plaintiffs' overpayment, but Plaintiffs' allegation
that Bosch was intimately involved in the creation of the
component which caused the overpayment suffices to establish
Article III standing.
the (noncontrolling) cases which Bosch cites in support of
its argument compel a different result because each is
legally or factually distinguishable. Bosch cites In re
Schering Plough Corp. Intron/Temodar Consumer Class
Action for the proposition that overpayment damages
provide standing only if traceable to the actions of the
defendant. 678 F.3d 235, 245 (3d Cir. 2012). In holding that
the plaintiffs had not identified a causal relationship
between the alleged misconduct (unlawful marketing practices)
and the alleged injury (payment for ineffective drugs), the
Third Circuit noted that the plaintiffs did not actually
allege that they “ever paid for a Temodar or Intron-A
prescription.” Id. at 247. The plaintiffs did
allege that they paid for Rebetol, but the Third Circuit
explained that “[i]t is pure conjecture to conclude
that because Schering's misconduct caused other doctors
to write prescriptions for ineffective off-label uses for
other products, Local 331 ended up paying for two
prescriptions for Rebetol due to the same kind of
misconduct.” Id. at 248. Here, the causal
connection is much clearer: Bosch worked with GM to develop
the vehicle component which was the source of the overpayment
by Plaintiffs. In re Toyota Motor Corp. Unintended
Acceleration Mktg., Sales Practices, & Prod. Liab.
Litig. is similarly inapplicable. 826 F.Supp.2d 1180,
1191 (C.D. Cal. 2011) (dismissing claims against North
American divisions of Toyota Motor Corporation because the
complaint did not allege that the American advertisements
were aired in other countries and thus did not identify a
link between the defendants responsible for U.S. marketing
and “the buying decisions of Toyota customers
worldwide”). Bosch's involvement in the creation of
a vehicle component which has caused financial harm to
Plaintiffs has been clearly alleged. Between that involvement and
Bosch's alleged marketing for “clean diesel,
” Plaintiffs have adequately alleged that their
overpayment can be fairly traced to Bosch.
allegations of overpayment are sufficient to enable them to
advance their state law consumer protection and fraudulent
concealment claims. Plaintiffs' other alleged damages
(essentially that, if the existence of a defeat device is
proven, the value of their vehicles will decrease) need not
be considered for standing purposes. Defendants separately
challenge Plaintiffs' standing to bring a RICO claim.
That argument is based upon a statutory standing requirement,
not Article III standards, and thus will be considered below.
next challenge the form of the consolidated amended
complaint. GM argues, first, that the entire complaint should
be dismissed because it does not contain a “short and
plain statement of the claim showing that the pleader is
entitled to relief, ” as required by Federal Rule of
Civil Procedure 8(a). Second, GM (joined by Bosch) argues
that all of Plaintiffs' state law claims which sound in
fraud do not meet Federal Rule of Civil Procedure 9(b)
specificity standards. Third, Bosch argues that Plaintiffs
have engaged in impermissible group pleading. Each argument
will be addressed in turn.
8(a)(2) mandates that pleadings, including complaints, must
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Id. However, federal pleading rules “do not
countenance dismissal of a complaint for imperfect statement
of the legal theory supporting the claim asserted.”
Johnson v. City of Shelby, Miss., 135 S.Ct. 346, 346
(2014). The consolidated amended complaint spans 229 pages
and contains 900 pages of exhibits. Defendants are correct
that this complaint is lengthy, but this is not one of the
extraordinarily rare scenarios where a complaint should be
dismissed because of its length. Defendants fault the
consolidated amended complaint for including “scores of
paragraphs [related] to alleged misconduct involving
Volkswagen, Audi, Porsche, Mercedes, and Fiat
Chrysler.” GM Mot. Dismiss at 12. These allegations are
of limited relevance, but do provide context for
Plaintiffs' remaining allegations. The undergirding
purpose of Rule 8(a) is to ensure that the complaint provides
notice. If the length and unnecessary complexity of the
complaint obscures the true nature of the allegations and
claims, dismissal may be appropriate. This is not such a
also argue that Plaintiffs have failed to meet the heightened
pleading standards of Rule 9(b) with respect to their
allegations of fraud. The adequacy of Plaintiffs' fraud
allegations are best resolved in conjunction with the
analysis of whether Plaintiffs have stated a claim. However,
one general point will be taken up separately.
specificity required for allegations of affirmative
misrepresentations is necessarily different than the
specificity required for allegations of fraudulent
omissions. The purpose of Rule 9(b) is to put
defendants on notice of the nature of the claim. See
Williams v. Duke Energy Int'l, Inc., 681 F.3d 788,
803 (6th Cir. 2012) (“[I]t is a principle of basic
fairness that a plaintiff should have an opportunity to flesh
out her claim through evidence unturned in discovery. 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.” (internal citations omitted)). “When
it comes to claims of fraud by omission or fraudulent
concealment, the plaintiff faces a slightly more relaxed
pleading burden; the claim ‘can succeed without the
same level of specificity required by a normal fraud
claim.'” Beck v. FCA U.S. LLC, No.
17-CV-10267, 2017 WL 3448016, at *9 (E.D. Mich. Aug. 11,
2017) (quoting Baggett v. Hewlett-Packard Co., 582
F.Supp.2d 1261, 1267 (C.D. Cal. 2007)). The reasons for the
disparate burden are straightforward. Fraudulent acts occur
at a specific time, fraudulent omissions occur over a period
of time. Fraudulent acts can be specifically described, but
omissions are, by very definition, more amorphous.
Court explained in Counts, the Sixth Circuit has
rejected the argument that it has the authority to
“relax” the Rule 9(b) particularity requirement.
See Counts v. General Motors, LLC, 237 F.Supp.3d
(E.D. Mich. 2017) (citing United States v. Walgreen
Co., 846 F.3d 879, 880- 81 (6th Cir. 2017)). That said,
the Sixth Circuit has recognized that
“‘particular' allegations of fraud may demand
different things in different contexts.”
Walgreen, 846 F.3d at 881. Plaintiffs must allege
their theory of fraudulent omissions with enough specificity
to provide Defendants with fair notice of the claims. At the
same time, in reviewing the consolidated amended complaint,
“the difficulty of obtaining proprietary . . .
information or pinpointing the point in time when a
fraudulent omission occurred will be taken into
account.” Counts, 237 F.Supp.3d at 595.
further argues that the Plaintiffs have engaged in
impermissible group pleading. This argument is primarily
focused on Plaintiffs' RICO claim. As discussed below,
Plaintiffs have adequately alleged the prima facie elements
of a RICO claim with sufficient specificity to put Defendants
on notice of their alleged involvement in the enterprise.
Bosch further objects to Plaintiffs' decision to define
“Bosch” as including both Bosch LLC and Bosch
Gmbh. Bosch contends that Plaintiffs' failure to
distinguish between these two entities precludes Bosch from
understanding exactly what its constituent entities are
asserting claims of fraud, plaintiffs are not permitted to
“generally assert all claims against all
defendants.” State Farm Mut. Auto. Ins. Co. v.
Universal Health Grp., Inc., No. 14-CV-10266, 2014 WL
5427170, at *3 (E.D. Mich. Oct. 24, 2014) (citing Hoover
v. Langston Equip. Assocs., Inc., 958 F.2d 742, 745 (6th
Cir. 1992)). But, at the same time, the Federal Rules of
Civil Procedure are premised on the idea that pleadings
should be simple and focused on providing notice. See
Llewellyn-Jones v. Metro Prop. Grp., LLC, 22 F.Supp.3d
760, 780 (E.D. Mich. 2014). As discussed above, allegations
of fraudulent concealment will inevitably be less specific
than allegations of affirmative misrepresentation.
allege that “[b]oth Bosch GmbH and Bosch LLC . . .
operate under the umbrella of the Bosch Group.” Con.
Am. Compl. at 41. Members of both Bosch GmbH and Bosch LLC
were involved in the alleged conspiracy here. Plaintiffs
indicate that the “acts of individuals described in
this Complaint have been associated with Bosch GmbH and Bosch
LLC whenever possible.” Id. But Plaintiffs
further contend that those employees “often hold
themselves out as working for ‘Bosch.'”
Id. at 42. In other words, identifying “which
Bosch defendant” was involved in which particular
actions cannot always be “ascertained with
certainty.” Id. Plaintiffs believe that
discovery will alleviate this confusion. Id.
Plaintiffs' allegation that Bosch employees and
constituent entities often blur the legal boundaries between
Bosch subsidiaries, the allegations against the Bosch
Defendants are sufficiently specific. Plaintiffs are
proceeding primarily on a theory of fraudulent omissions, and
Bosch's alleged role within that fraudulent scheme is
clear. “Rule 9(b) is not to be read in isolation, but
is to be interpreted in conjunction with Federal Rule of
Civil Procedure 8.” U.S. ex rel. Bledsoe v. Cmty.
Health Sys., Inc., 501 F.3d 493, 503 (6th Cir. 2007).
“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. . . . It is a principle of basic fairness that a
plaintiff should have an opportunity to flesh out her claim
through evidence unturned in discovery.'” State
Farm Mut. Auto. Ins. Co. v. Pointe Physical Therapy,
LLC, 107 F.Supp.3d 772, 788 (E.D. Mich. 2015) (quoting
JAC Holding Enterprises, Inc. v. Atrium Capital Partners,
LLC, 997 F.Supp.2d 710, 727 (E.D. Mich. 2014)). This is
one such case.
other words, the Rule 9(b) requirements are not meant to be
an insurmountable barrier. Although the precise identity of
the subsidiary and/or employee which may have taken certain
actions is unclear, that level of detail is unnecessary to
put the Bosch Defendants on notice of the claims made against
them. The consolidated amended complaint will not be
dismissed without prejudice for engaging in group pleading.
seek dismissal of the state law claims. First, they argue
that Plaintiffs have failed to state claims for affirmative
misrepresentation. Second, Defendants argue that
Plaintiffs' fraudulent omission claims should be
dismissed or stayed. Specifically, Defendants assert that
Plaintiffs' concealment or omission claims are preempted,
have not been plausibly pled, and should be stayed under the
primary jurisdiction doctrine. In response, Plaintiffs deny
that they are advancing any fraud claims premised on
affirmative misrepresentations. See Pl. Resp. GM
Mot. Dismiss at 9-10 (“But Plaintiffs do not sue for
common law fraud under state law for affirmative
misrepresentations.”). Rather, “Plaintiffs sue
for omissions of material fact, fraudulent concealment,
violation of state law consumer protection statutes, and
violation of RICO.” Id. at 10. Plaintiffs
further challenge the assertion that the state consumer
protection laws on which it relies incorporate only claims of
“common law fraud”: “The consumer
protection statutes bar not only fraud but also deceptive,
unfair, and unlawful conduct.” Id. For similar
reasons, Plaintiffs contend that GM's argument that
Plaintiffs have failed to plead reliance on affirmative
misrepresentations is irrelevant.
acknowledge that the consolidated amended complaint includes
an extended discussion of various advertisements and press
releases which GM issued regarding vehicles equipped with the
Duramax engine. Those allegations, Plaintiffs explain, are
not meant to buttress affirmative misrepresentation claims.
They are meant “to show that Defendants' omissions
were material for purposes of claims under consumer
protection statutes and RICO.” Id. at 11. To
repeat: “The relevance of those promises is GM's
acknowledgement that low emissions are material . . . to a
reasonable consumer.” Id. at 12.
Plaintiffs' decision to disavow any affirmative
misrepresentation claims, the remaining issues are whether
Plaintiffs' state law claims are preempted by the Clean
Air Act (CAA), whether Plaintiffs have plausibly pleaded
fraudulent omission claims, and whether any plausibly pleaded
fraudulent omission claims should be stayed pursuant to the
primary jurisdiction doctrine. Each question will be
addressed in turn.
may be either expressed or implied, and ‘is compelled
whether Congress' command is explicitly stated in the
statute's language or implicitly contained in its
structure and purpose.'” Gade v. Nat'l
Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992)
(quoting Jones v. Rath Packing Co., 430
U.S. 519, 525 (1977)). In all preemption cases, and
especially where “Congress has ‘legislated . . .
in a field in which the States have traditionally occupied,
' . . . [courts] ‘start with the assumption that
the historic police powers of the States were not to be
superseded by the Federal Act unless that was the clear and
manifest purpose of Congress.'” Medtronic, Inc.
v. Lohr, 518 U.S. 470, 485 (1996) (quoting Rice v.
Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)).
“Environmental regulation is a field that the states
have traditionally occupied.” Merrick v.
Diageo Americas Supply, Inc., 805 F.3d 685, 694
(6th Cir. 2015). The same is true of consumer protection and
advertising regulations. See In re Ford Fusion &
C-Max Fuel Econ. Litig., No. 13-MD-2450 KMK, 2015 WL
7018369, at *28 (S.D.N.Y. Nov. 12, 2015); Gilles v. Ford
Motor Co., 24 F.Supp.3d 1039, 1047 (D. Colo. 2014).
Where the statute does not expressly preempt state law,
preemption may be implied. The Supreme Court has recognized
two types of implied pre-emption: field pre-emption, where
the scheme of federal regulation is so pervasive as to make
reasonable the inference that Congress left no room for the
States to supplement it, and conflict pre-emption, where
compliance with both federal and state regulations is a
physical impossibility, or where state law stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.
Gade, 112 S.Ct. at 98 (internal citations omitted).
preemption arguments arise out of Section 209 of the CAA.
That section, codified at 42 ...