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Bledsoe v. FCA U.S. LLC

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

March 29, 2018

JAMES BLEDSOE, et al., on behalf of themselves and all others similarly situated, Plaintiffs,
FCA U.S. LLC, a Delaware corporation, and CUMMINS INC., an Indiana corporation, Defendants.



         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 in excess of federal and state emissions standards. The Complaint alleges violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO Act”), the Magnuson Moss Warranty Act (“MMWA”), as well as claims asserted under the respective laws of 49 states and the District of Columbia. Plaintiffs allege that Defendants marketed the Trucks as containing “clean diesel engines, ” while they discharged emissions at levels greater than what a reasonable customer would expect based on the alleged representations. Defendants have moved for dismissal of Plaintiffs' Complaint, which Plaintiffs oppose.

         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 the following Trucks:

1. 2007-2010 Dodge Ram 2500 and 3500 with Cummins diesel (2WD, 4WD)
2. 2011-2012 Dodge Ram 2500 and 3500 with Cummins diesel (non-SCR systems, 2WD, 4WD).

         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.

         Pending before the Court are Defendants' motions to dismiss plaintiffs' Consolidated and Amended Class Action Complaint (“Amended Complaint” or “Complaint”) pursuant, in part, to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons outlined below, Defendants' motions are GRANTED WITHOUT PREJUDICE.

         II. Background

         The United States Environmental Protection Agency (“EPA”) promulgates emissions standards and regulations for manufacturers of diesel engines. Plaintiffs' Complaint maintains that diesel engines, unlike their gasoline counterparts, generate power by compressing a mist of liquid fuel and air to very high temperatures and pressures, causing the mixture to spontaneously combust. See Dkt. 22, Pg. ID 1540. One by-product of this diesel combustion process is the creation of oxides of nitrogen (“NOx”), which include a variety of nitrogen and oxygen chemical compounds that only form at high temperatures. Id. NOx emissions have been the target of EPA regulation, for the pollutant and harmful nature of nitrogen oxides is well documented.[1]

         In January 2001, the EPA issued the “2010 NOx standard, ” requiring NOx emissions from heavy-duty diesel engines be reduced by 95 per cent-to .20 grams of NOx per horsepower-hour-by no later than 2010. See 66 Fed.Reg. 5, 002 (Jan. 18, 2001). The EPA exercised authority pursuant to Section 202 of the Clean Air Act (“CAA”) in enacting this new standard. As one court explained, “[b]y delaying the effective date until 2010, [the] EPA gave [the] industry nine years to innovate the necessary new technologies.” Mack Trucks, Inc. v. E.P.A., 682 F.3d 87, 89 (D.C. Cir. 2012).

         The named Plaintiffs in this case are 15 alleged purchasers or lessees of model year 2007-2012 Dodge Ram 2500 and 3500 heavy-duty trucks equipped with Defendant Cummins' 6.7-liter turbo diesel engines. Defendant Fiat Chrysler Automobiles LLC (“FCA”) is a motor vehicle manufacturer and a licensed distributor of new, previously untitled Chrysler, Dodge, Jeep, and Ram brand motor vehicles. Dkt. 22, Pg. ID 1537. Plaintiffs allege that FCA sells and leases the vehicles it manufactures, including the Trucks at issue in this case, through FCA franchise dealerships. Dkt. 22, Pg. ID 1538. Defendant Cummins Inc. is a Fortune 500 company that designs, manufactures, and distributes engines, filtration, and power generation products. Dkt. 22, Pg. IDs 1538-39. Cummins Inc. manufactured the diesel engines for the Trucks at issue in this case.

         The Complaint alleges that each Plaintiff is similarly situated. Each purchased or leased a 2007-2012 model year Dodge Ram 2500 or 3500. These trucks were allegedly:

[E]quipped with an emissions system that turned off or limited its emissions reduction system during normal driving conditions and emitted pollutants such as NOx at many multiples of emissions emitted from gasoline-powered vehicles, at many times the level a reasonable consumer would expect from a “clean Diesel, ” and at many multiples of that allowed by federal law.

See, e.g., Dkt. 22, Pg. ID 1510 at ¶ 27. Throughout their Complaint, Plaintiffs allege that Defendants installed “defeat devices” in the Trucks, which resulted in significantly increased emissions when tested during normal driving as compared to when tested in laboratory settings.[2]

         According to the Complaint, Plaintiffs tested one 2012 Dodge Ram 2500, the results of which allegedly show that the vehicle emitted emissions at amounts greater than those permitted by federal and state regulations, higher than its “gasoline engine counterpart, ” higher than what a reasonable consumer would expect, and higher than levels set for vehicles to obtain certificates of compliance. Dkt. 22, Pg. ID 1505. In addition to the emissions test, Plaintiffs support their allegations by pointing to the existence of a purported “worldwide emissions scandal, ” unrelated regulatory enforcement actions directed at other vehicles manufactured by FCA, and prior regulatory enforcement taken against Cummins for problems with other engines. Plaintiffs contend that these facts give rise to a plausible inference that FCA and Cummins engaged in the alleged “Emissions Fraud Enterprise, ” where they created, marketed, and sold to consumers Trucks with defective emissions systems or with defeat devices installed in them. According to Plaintiffs, this defeat device allow the vehicles to perform in such a way to “pass” emissions testing when tested, but allow the Trucks to operate differently (emitting emissions as a much higher level) during actual on-road performance.

         The consolidated amended Complaint includes two claims brought on behalf of a proposed nationwide class of claimants. The first alleges that the Defendants violated the RICO Act. Dkt 22, Pg. IDs 1586-1601. The second alleges that the Defendants violated the Magnuson Moss Warranty Act. Dkt. 22, Pg. IDs 1601-04. The Complaint contains additional state law claims arising under the fraudulent concealment and consumer protection laws of 49 states and the District of Columbia. See generally Dkt. 22.

         Defendants have separately moved for dismissal pursuant to Federal Rules of Civil Procedure 8(a), 9(b), 12(b)(1) and 12(b)(6). Dkts. 26, 27.

         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 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.

         IV. Analysis

         Defendants' motions to dismiss call upon this Court to answer the critical question of “how much is enough”-how much factual matter must be pleaded to move the allegations advanced in Plaintiffs' Complaint across the line from “conceivable” to “plausible.” As noted above, 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. 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 has 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).

         Thus, to determine whether the Complaint states a plausible claim for relief, the Court must identify and weigh the well-pleaded factual matter contained in Plaintiffs' Complaint, while not accept- ing as true any conclusory allegations or inferences that are not sufficiently supported by well-pleaded facts. The Court thus first turns to the factual matters alleged in Plaintiffs' Complaint.

         A. Plaintiffs' Purported Factual Allegations

         At the heart of Plaintiffs' case is the allegation that while 2007-2012 model year Dodge Ram 2500 and 3500 heavy duty trucks were marketed as “clean diesel” vehicles that complied with federal and state emissions standards and offered customers the “strongest, cleanest quietest best-in-class engine on the market, ” the Trucks in reality were anything but clean diesel vehicles. Plaintiffs argue that the Trucks produce emissions in quantities substantially higher than what Defendants allegedly advertised and at amounts greater than those permitted by federal and state regulations. Plaintiffs also allege Defendants manufactured the Vehicles to include “defeat devices” that alter the Trucks' performance so that, when tested under regulatory testing conditions they perform within the range of compliance, but during normal on-road use they do not.

         Plaintiffs rely on a set of four purported factual allegations to support their claims: 1) the results of portable emission measurement system (“PEMS”) testing conducted on a 2012 Dodge Ram 2500; 2) the existence of a worldwide emissions scandal; 3) the EPA's on-going regulatory enforcement action concerning model year 2014-2016 Dodge Ram 1500 and Jeep Grand Cherokee EcoDiesel vehicles; and 4) the history of regulatory enforcement involving other Cummins engines.

         i. The Test

         Plaintiffs aver to have conducted testing on one 2012 Dodge Ram 2500 using a PEMS. See Dkt. 22, Pg. IDs 1567-69. According to the Complaint, the results show that the vehicle produced a very high ...

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