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In re Duramax Diesel Litigation

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

August 1, 2018

IN RE DURAMAX DIESEL LITIGATION, ANDREI FENNER, et al, Plaintiffs,
v.
GENERAL MOTORS, LLC, ROBERT BOSCH GMBH, and ROBERT BOSCH LLC, Defendants.

          ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS IN PART

          THOMAS L. LUDINGTON UNITED STATES DISTRICT JUDGE

         On May 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 Court 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. Also 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.

         In September 2017, GM and Bosch requested extensions of the briefing page limit for their motions to dismiss. ECF Nos. 34, 35, 39. In response, the Court suggested that “judicial efficiency might be served by resolving threshold issues in a motion to dismiss under Federal Rule of Civil Procedure 12(b), ” and reserving challenges to Plaintiffs' state law claims for a motion for judgment on the pleadings. ECF No. 36 at 2. Defendants were amenable to that suggestion.

         On October 13, 2017, Defendants filed motions to dismiss. ECF Nos. 44, 45. On February 20, 2019, those motions to dismiss were denied. ECF No. 61. Pursuant to the parties' stipulated schedule, ECF No. 62, Defendants subsequently filed answers to the amended complaint. ECF Nos. 64, 65. And on May 2, 2018, GM filed a motion for judgment on the pleadings. ECF No. 66.[1]For the following reasons, that motion will be granted in part.

         I.

         Because a motion for judgment on the pleadings is subject to the same standard which governs a motion to dismiss, the summary of Plaintiffs' allegations articulated in the February 20, 2018, opinion and order will be reproduced in full. Feb. 20, 2018, Op. & Order, ECF No. 61.

         The consolidated amended complaint names thirteen Plaintiffs residing in ten states.[2] 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.

         A.

         According to Plaintiffs, GM represented the Duramax engine as providing both low emissions and high performance. Id.[3] 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.

Id.[4]

         In 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. at 1-2.

         The 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 standard.

Id.

         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 standard.” Id.[5]

         Plaintiffs 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.[6] 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 identified above.

         B.

         1.

         Plaintiffs 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.

         According 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. Id.

         According 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.

         In 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. at 6-7.

         C.

         Unlike 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.

Id.

         Plaintiffs 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.

         D.

         In the 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.

         In the 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.

         Plaintiffs 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, ...


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