Lewis v. Mercedes-Benz USA, LLCLewis v. Mercedes-Benz USA, LLC
Case Information
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 19-CIV-81220-RAR
TIMOTHY LEWIS, TERESA MASSA,
LINDA GAZIE, STEVEN WALLACH,
ANA SCHWARTZ, JOSEPH MONOPOLI,
JAMES FITZPATRICK, and SYNTHIA
PRAGLIN, on behalf of themselves and all
others similarly situated,
Plaintiffs,
v.
MERCEDES-BENZ USA, LLC,
DAIMLER AG and GRAMMER AG,
Defendants.
_______________________________________/
ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS
Mercedes-Benz advertises its vehicles as “the best or nothing.” Plaintiffs in this lawsuit— who allege that the headrests in their Mercedes vehicles spontaneously eject—might beg to differ. Specifically, Plaintiffs allege that their vehicles contained, at the time of purchase, a latent defect in the headrests that causes them to spontaneously spring forward with significant force, posing a serious threat to their safety. Even worse, according to Plaintiffs, is that Defendants knew about this defect, failed to disclose it, and actively conspired with each other to conceal it. Defendants have a different view, and for a host of factual and legal reasons, ask the Court to dismiss this case in its entirety.
Before the Court is Defendants’ Renewed Motion to Dismiss Plaintiffs’ First Amended Complaint [ECF No. 66] (“Motion”). Having reviewed the Motion, Plaintiffs’ Response in Opposition [ECF No. 68] (“Response), Defendants’ Reply [ECF No. 69] (“Reply”), the record, applicable law, and being otherwise fully advised, it is hereby
ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss is GRANTED IN PART as set forth herein.
BACKGROUND When a car is impacted from behind, or “rear-ended,” the occupants of the vehicle often experience whiplash from the resulting forceful back-and-forth movement of their necks. In an effort to solve this problem, Defendants Mercedes Benz USA, LLC (“MBUSA”) and Daimler AG (“Daimler” and together with MBUSA, the “Mercedes Defendants”) embedded in the headrests of their vehicles a mechanism known as an Active Head Restraint (“AHR”), which is designed to spring forward in the event of a rear-end collision and rapidly push the cushioned headrest out to catch the occupant’s head. First Am. Compl. [ECF No. 22] (“FAC”) ¶ 1. The headrest and AHR are manufactured by Defendant Grammer AG (“Grammer”) and installed in the vehicles of the Mercedes Defendants, who branded the product “NECK-PRO.” Id .
The forward-facing padded surface of the NECK-PRO headrest is mounted to a plastic carriage that is loaded by pre-tensioned springs when stowed in the headrest. Id . ¶ 121. The carriage contains a plastic bracket that acts as the triggering mechanism and holds the spring- loaded release in place until an electronic sensor connected to the vehicle’s computer control unit indicates that a rear-end collision is occurring. Id. ¶ 122. When the sensor detects a rear-end collision, it triggers the bracket to release, allowing the carriage to be forced forward by the springs. .
Obviously, these devices are only supposed to deploy upon an external force onto the car. But the First Amended Complaint alleges that Defendants designed the bracket with an inferior and inexpensive form of plastic, which cracks and breaks down prematurely under the constant pressure of the tensed springs in the headrest, causing the AHR to spontaneously deploy. Id . The force of the impact not only can cause bodily harm to the head and neck, but also creates a risk of collision when the headrest deploys suddenly while the vehicle is being driven. Id. ¶ 2. Plaintiffs state that the vehicles equipped with the defective NECK-PRO in the United States number at least in the “hundreds of thousands,” and there is no way for a vehicle owner to predict when the AHR in the headrest will deploy. Id. ¶ 3.
Plaintiffs’ First Amended Complaint avers that Defendants possessed exclusive and superior knowledge of the defect as early as 2006 based upon
[E]ngineering design reports, pre-production testing, pre-production design failure mode analyses, manufacturing and design validation reports, plastic aging tests, plastic material data reports, consumer complaints to the National Highway and Traffic Safety Administration (“NHTSA”), consumer complaints to MBUSA dealerships, consumer complaints on website forums, aggregate warranty data compiled from MBUSA dealerships, and repair orders and parts data received from dealerships.
Id . ¶ 7. Plaintiffs also point to a Technical Service Bulletin (“TSB”) [2] issued by the Mercedes Defendants to their network of dealerships in 2007 entitled “Restraints – Head Restraint Activate Without Cause,” which stated that the problem “may be caused by damage to the seat wiring harness causing a short circuit.” . ¶ 161. Despite having this information, Defendants purportedly conspired to conceal the defect from the public while continuing to manufacture and sell vehicles with the defect. Moreover, Defendants continued to publicly promote the safety of their vehicles. Plaintiffs allege they were misled by these public communications, which caused them to purchase Mercedes vehicles that they otherwise would not have if they had known of the defect.
The nine Plaintiffs in this case are Timothy Lewis, Linda Gazie, Steven Wallach, Teresa Massa, Ana Schwartz, Joseph Monopoli, James Fitzpatrick, Synthia Praglin, and Sawntanaia Harris. Lewis, Gazie, Wallach, Massa, and Schwartz are residents of Florida; Monopoli is a resident of New York; Fitzpatrick is a resident of North Carolina; and Praglin and Harrris are residents of California. These Plaintiffs are owners of a Mercedes vehicle with NECK-PRO headrests and purchased their vehicles between 2011 and 2019. They purport to be class representatives for a nationwide class (“Nationwide Consumer Class”)—in addition to a Florida subclass, a New York subclass, a California subclass, and a North Carolina subclass—all comprised of current or former owners and lessors of vehicles with defective NECK-PRO headrests (“Class Vehicles”). See id . ¶ 211. The First Amended Complaint asserts the following claims:
• Count I: Violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c), against the Mercedes Defendants on behalf of Plaintiffs and the Nationwide Consumer Class;
• Count II: Violation of RICO, 18 U.S.C. § 1962(d), against all Defendants on behalf of Plaintiffs and the Nationwide Consumer Class;
• Count III: Violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), F LA . S TAT . § 501.201 et seq. , against the Mercedes Defendants on behalf of a Florida subclass; • Count IV: Violation of the New York General Business Law § 349 against the Mercedes Defendants on behalf of a New York subclass;
• Count V: Violation of the New York General Business Law § 350 against the Mercedes Defendants on behalf of a New York subclass;
• Count VI: Violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq ., against Defendant MBUSA on behalf of a California subclass;
• Count VII: Violation of the California Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq. , against the Mercedes Defendants on behalf of a California subclass; • Count VIII: Violation of the California False Advertising Law, Cal. Bus. & Prof. Code § 17500 et seq. , against the Mercedes Defendants on behalf of a California subclass;
• Count IX: Violation of the Song-Beverly Consumer Warranty Act, Cal. Civ. Code §§ 1791.1 and 1792 for breach of the implied warranty of merchantability against the Mercedes Defendants on behalf of a California subclass;
• Count X: Violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 et seq. , against the Mercedes Defendants on behalf of a North Carolina subclass; • Count XI: Fraudulent concealment against the Mercedes Defendants on behalf of the New York, California, and North Carolina subclasses;
• Count XII: Fraud by concealment against Defendant Grammer on behalf of the New York, California, and North Carolina subclasses;
• Count XIII: Violation of the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. § 2301 et seq. , against the Mercedes Defendants on behalf of the Nationwide Consumer Class; • Count XIV: Violation of the MMWA, 15 U.S.C. § 2301 et seq. , against Defendant Grammer on behalf of the Nationwide Consumer Class;
• Count XV: Unjust enrichment against the Mercedes Defendants on behalf of the Nationwide Consumer Class; and • Count XVI: Unjust enrichment against Defendant Grammer on behalf of the Nationwide Consumer Class.
Defendants have now moved to dismiss all counts under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(2) for lack of personal and subject matter jurisdiction, and under 12(b)(6) for failure to state a claim upon which relief can be granted.
ANALYSIS
In their Motion, Defendants raise several arguments in favor of dismissal. Because a
federal court “generally may not rule on the merits of a case without first determining that it has
jurisdiction over the category of claim in suit (subject-matter jurisdiction) and the parties (personal
jurisdiction)[,]”
Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp.
,
I. SUBJECT MATTER JURISDICTION
The Court begins its analysis of subject matter jurisdiction by addressing standing under Article III of the United States Constitution and examining whether Plaintiffs have sufficiently stated a concrete injury given their allegations of economic harm in the form of overpayment. From there, the Court will analyze standing in the context of Counts of XIII-XVI of the First Amended Complaint, which assert state law claims on behalf of out-of-state class members. As explained below, these counts—which allege violations of the MMWA and unjust enrichment— must fail as to the Nationwide Consumer Class because Plaintiffs lack standing to represent a nationwide class on these claims. Finally, the Court will consider whether subject matter jurisdiction exists as to Plaintiffs’ remaining MMWA claims under Counts XIII and XIV.
A. Standing
i) Legal Standard
One element of the case-or-controversy requirement under Article III of the United States
Constitution is that plaintiffs “must establish that they have standing to sue” in federal court.
Raines v. Byrd
,
Defendants bring two distinct challenges to Plaintiffs’ standing. First, they contend that seven of the nine Plaintiffs lack standing because they fail to allege that their vehicles ever manifested the defect at issue. Second, they argue that the nationwide class allegations should be dismissed because Plaintiffs do not have standing to pursue relief on behalf of out-of-state class members. Because Defendants’ standing arguments solely address the allegations in the First Amended Complaint rather than any extrinsic materials, this is considered a facial attack, which “requires the [C]ourt merely to look and see if the [P]laintiff[s] ha[ve] sufficiently alleged a basis of subject matter jurisdiction.” Id . (citation omitted). Because this is a facial attack, the allegations in the First Amended Complaint are taken as true for purposes of the standing analysis. .
ii) Sufficiency of Plaintiffs’ Factual Allegations Defendants argue that the seven Plaintiffs who have not alleged that the AHRs in their vehicles malfunctioned, activated, or failed in any way have not suffered an “injury in fact” or, at the least, such injury is not actual or imminent. See Mot. at 3-4. At first blush, this makes logical sense, but Plaintiffs’ injuries stem from the purchase of the vehicles, rather than their personal experience with the defect in question. All Plaintiffs contend that they “paid a premium price” for the Mercedes vehicles “because [they] trusted Mercedes to provide high-quality and safe automobiles.” FAC ¶¶ 21, 25, 28, 31, 34, 37, 39, 43, 48. Therefore, Plaintiffs allege that the “value of [their] vehicle[s] has been diminished as a result of the defective NECK-PRO[,]” and had they “known of the AHR defect, [they] would not have purchased [their] vehicle[s], or would not have paid as much for them as [they] did.” . Because they adequately allege a defect in the product they purchased—causing economic injury—this is enough to establish Article III standing.
An economic injury is the “epitome” of a concrete injury.
MSPA Claims 1, LLC v. Tenet
Fla., Inc.
,
For example, in
Yachera v. Westminster Pharmaceutical, LLC
,
As in
Yachera
, the potential health consequences of a headrest deploying spontaneously
support Plaintiffs’ assertions that the representations regarding the safety of NECK-PRO were part
of the bargain they struck in buying their cars. Of course, because Plaintiffs claim they did not
receive what they bargained for—namely, a defect-free vehicle—Plaintiffs must still adequately
allege the existence of a defect.
See Debernardis
,
Defendants submit that because seven of the nine Plaintiff have not alleged that the AHRs in their vehicles malfunctioned or failed, these seven Plaintiffs have failed to adequately allege the existence of a defect. Mot. at 3. But this mischaracterizes the nature of the defect alleged by Plaintiffs—which is that the latch holding the spring-loaded headrest in place is made of cheap plastic that will inevitably wear down and cause the headrest to spontaneously deploy. In other words, Plaintiffs allege that the NECK-PRO headrests in their vehicles were ticking time bombs from the day they were purchased.
Therefore, Defendants’ “argument succeeds only if one assumes that a plaintiff who has
not
experienced
a safety defect
does not have
a safety defect. [But] [i]f the Court accepts the
allegations that all [Mercedes] vehicles had the safety defect at the time of purchase, and the
defects were not subsequently remedied . . . , all Plaintiffs suffered an economic loss at the time
of purchase because they received a defective vehicle.”
In re Toyota Motor Corp.
, 790 F. Supp
2d at 1165 (emphasis in original);
see also Cole v. Gen. Motors Corp.
,
Plaintiffs have adequately pleaded the existence of a defect. They have alleged that the
NECK-PRO AHRs are secured by a bracket made from low-quality, inexpensive plastic, which
cannot withstand the constant pressure imposed on them through normal operation.
See
FAC ¶¶
123, 145. Plaintiffs have set forth enough factual detail to explain how the component inevitably
fails and causes the AHR to spontaneously deploy, regardless of whether the vehicle has been
involved in a collision. They also plead that this defect has caused them economic harm and they
would not have purchased the vehicles had the defect been disclosed prior to purchase.
See id.
¶¶
25, 28, 31, 34, 37, 40, 43, 48;
see also Painters and Allied Trades Dist. Council 82 Health Care
Fund v. Takeda Pharm. Co. Ltd.
,
While Defendants believe Plaintiffs’ general allegations of overpayment are not sufficiently imminent for Article III purposes, general factual allegations of injury ( i.e. , overpayment) suffice at the pleadings stage because the Court must “presum[e] that general allegations embrace those specific facts that are necessary to support the claim.” Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992). Accordingly, accepting the aforementioned allegations as true, Plaintiffs bargained for safe vehicles free of defective headrests, but instead received unsafe vehicles with defective headrests. This overpayment constitutes an economic injury that is sufficient to confer standing.
iii) Plaintiffs’ Nationwide Class Allegations on Issues of State Law Counts XIII-XVI raise claims on behalf of all Plaintiffs and the Nationwide Consumer Class. Defendants assert that Plaintiffs lack standing to pursue relief on these claims on behalf of any out-of-state class members, and thus seek dismissal of these Counts as to the nationwide class. Plaintiffs, on the other hand, believe that at the pleading stage, they need only establish that they have standing to pursue their own claims, and the issue of Plaintiffs’ standing as to the nationwide class should be deferred until class certification.
With due respect for the contrary out-of-circuit authority Plaintiffs cite, the Eleventh
Circuit’s standing jurisprudence compels the conclusion that standing is hardly an issue the Court
can decide to hold in abeyance until a later date. To the contrary, “[a]s standing is a threshold
issue, addressing the issue of standing at the motion to dismiss phase of the litigation, rather than
waiting for the class certification phase, is not premature.”
Weiss v. Gen. Motors LLC
, 418 F.
Supp. 3d 1173, 1179 (S.D. Fla. 2019) (quoting
Sanchez-Knutson v. Ford Motor Co.
, No. 14-61344,
When proceeding on behalf of a putative class, “[i]t is not enough that a named plaintiff
can establish a case or controversy between himself and the defendant by virtue of having standing
as to one of many claims he wishes to assert. Rather, each claim must be analyzed separately, and
a claim cannot be asserted on behalf of a class unless at least one named plaintiff has suffered the
injury that gives rise to that claim.”
Prado-Steinman ex rel Prado v. Bush
,
Pursuant to
Prado
, “named plaintiffs in class actions have, time and again, been prohibited
from asserting claims under a state law other than that which the plaintiff’s own claim arises.”
Feldman v. BRP US, Inc.
, No. 17-61150, 2018 WL 8300534, at *6 (S.D. Fla. Mar. 28, 2018)
(collecting cases). In
Feldman
, the named plaintiff was a Florida resident who personally asserted
claims under the MMWA, FDUTPA, and Florida common law, but he lacked standing to assert
claims on behalf of a nationwide class because he “[did] not claim a legal injury in any state other
than Florida, nor d[id] he allege an injury that arises under the laws of any other state.”
Id.
;
see
also Lewis
,
So too here. Counts XIII and XIV assert violations of the MMWA on behalf of all Plaintiffs
and the Nationwide Consumer Class. The MMWA provides that “a consumer who is damaged by
the failure of a supplier, warrantor, or service contractor to comply with any obligation under this
chapter, or under a written warranty, implied warranty, or service contract, may bring suit for
damages and other legal and equitable relief.” 15 U.S.C. § 2310. Although the MMWA is a
federal law, it necessarily relies on underlying state law breach of warranty claims.
See Brown v.
Electrolux Home Prods., Inc.
, 817 F.3d 1225, 1231 (11th Cir. 2016) (“[C]laims under the
Magnuson-Moss Act are . . . based on state law.”). Because Plaintiffs are residents of only four
states, do not claim a legal injury in any state besides their home state, and do not allege an injury
that arises under the laws of any other state, they each lack standing to represent a nationwide class
on this claim.
See Weiss
,
The nationwide claims in Counts XV and XVI fail for the same reason. “Plaintiffs[’]
nationwide claims for unjust enrichment . . . are common law claims, and such claims rely on state
law.”
Ponzio v. Mercedes-Benz USA, LLC
,
Accordingly, Counts XIII-XVI are DISMISSED as to the Nationwide Consumer Class given Plaintiffs’ lack of standing. Thus, Plaintiffs are left with individual claims for unjust enrichment and violations of the MMWA. But this is not the end of the subject matter jurisdiction analysis. Plaintiffs’ individual MMWA claims cannot survive given its statutory text, which divests this Court of jurisdiction.
B. The Magnuson-Moss Warranty Act Defendants posit that this Court does not have jurisdiction to hear Plaintiffs’ claims under the plain terms of the MMWA, 15 U.S.C. section 2310(d)(3). The MMWA allows Plaintiffs to bring suit:
(A) in any court of competent jurisdiction in any State or the District of Columbia; or
(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.
Id . § 2310(d)(1). Paragraph 3, in turn, states that “[n]o claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection--if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.” . § 2310(d)(1)(3)(c). Because this suit is a class action and the number of Plaintiffs is less than 100, Defendants maintain that Plaintiffs’ MMWA claims are precluded by the plain terms of the statute.
Plaintiffs contend that Congress effectively repealed this limitation by enacting the Class
Action Fairness Act (“CAFA”) in 2005, the statute under which Plaintiffs bring this class action
suit. According to Plaintiffs, “CAFA supersedes the MMWA’s jurisdictional requirements, and
negates its one-hundred plaintiff rule.” Resp. at 47 (citing
Kuns v. Ford Motor Co.
, 543 F. App’x
572, 574 (6th Cir. 2013);
Weisblum v. Prophase Labs, Inc.
,
“As with any other statute, [the] interpretation of the [MMWA] begins with its text and the
presumption that Congress ‘says in a statute what it means and means in a statute what it says[.]’”
Nuclear Energy Inst., Inc. v. EPA
,
Traditional canons of statutory construction confirm that the plain text must control. Some
courts have concluded that federal courts can fall in the first category of section 2310(d)(1) on the
notion that federal courts lie within the geographical boundaries of states and CAFA provides a
basis for jurisdiction.
See, e.g.
,
Barclay v. ICON Health & Fitness, Inc.
, No. 19-02970, 2020 WL
6083704, at *7 (D. Minn. Oct. 15, 2020);
McGee v. Cont’l Tire N. Am., Inc.
, No. 06-06234, 2007
WL 2462624, at *4 (D.N.J. Aug. 27, 2007). But such a reading would render the second category
redundant. It is a “cardinal principle of statutory construction” that “a statute ought . . . to be so
construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or
insignificant.”
Duncan v. Walker
,
The Court is further persuaded by the Ninth Circuit’s decision in
Floyd v. American Honda
Motor Co.
,
Ultimately, the result here is compelled by the plain text of the statute. “If Congress enacted into law something different from what it intended, then it should amend the statute to conform it to its intent.” Lamie v. U.S. Trustee , 540 U.S. 526, 542 (2004). Thus, Plaintiffs’ individual MMWA claims under Counts XIII and XIV are DISMISSED for lack of subject matter jurisdiction.
II. PERSONAL JURISDICTION
Defendants challenge this Court’s jurisdiction over Grammer and Daimler. Because an analysis of personal jurisdictional is often akin to walking through a maze, it is helpful to provide a roadmap for the journey—lest the reader be left searching for breadcrumbs. There are two types mainland rather than simply meaning what the plain text states: that the numerosity requirement applies to district courts of the United States.
of personal jurisdiction at issue here. The first is under Federal Rule of Civil Procedure 4(k)(1)(C), which permits jurisdiction over a foreign defendant when authorized by a federal statute. This type of jurisdiction assesses Defendants’ contacts with the United States as a whole, rather than any particular state. Given that the Court has dismissed Plaintiffs’ MMWA claims, the only federal statute that potentially provides a basis for jurisdiction under 4(k)(1)(c) in this action is RICO. [4]
Now here is the catch: the RICO claims can only serve as a jurisdictional hook on which to base pendent personal jurisdiction over the remaining state law claims if they survive 12(b)(6) scrutiny. In other words, if the RICO claims survive, then the Court may exercise pendent jurisdiction over the other state law claims at issue since they arise from the same set of facts. Crucially, however, if the RICO claims fail, Plaintiffs must independently establish personal jurisdiction as to the remaining state law claims. Cf. Koch v. Royal Wine Merchants, Ltd. , 847 F. Supp. 2d 1370, 1374 (S.D. Fla. 2012) (“[I]f personal jurisdiction can be established under RICO, the doctrine of pendent personal jurisdiction would come into play, making it unnecessary to consider Florida’s long-arm statute.”). Additionally, Plaintiffs concede that the Court lacks personal jurisdiction over Grammer outside of Rule 4(k)(1)(C), so if the RICO claims fail, Grammer will be dismissed from this suit. Consequently, it is necessary to analyze the existence of jurisdiction under Rule 4(k)(1)(C) first and then to consider the sufficiency of the RICO claims.
The second type of jurisdiction at issue here is that under Federal Rule of Civil Procedure 4(k)(1)(A), which allows personal jurisdiction over a defendant in the state where the district court is located. Here, the Court looks to Florida’s long-arm statute, which assesses Defendants’ contacts with the State of Florida. Because the majority of Plaintiffs are not Florida residents and do not bring Florida-based claims, they are unable to invoke this jurisdiction. Thus, the RICO claims are the jurisdictional anchor on which the bulk of this case rests.
The Court will address each basis for personal jurisdiction in turn.
A. Legal Standards
A federal court may exercise two forms of personal jurisdiction: general jurisdiction and
specific jurisdiction. General jurisdiction may be exercised “over a defendant in a suit not arising
out of or related to the defendant’s contacts with the forum . . .”
Helicopteros Nacionales de
Colombia v. Hall
,
By contrast, specific jurisdiction may be exercised “over a defendant in a suit arising out
of or related to the defendant’s contacts with the forum.”
Helicopteros
,
Where, as here, the Court does not conduct an evidentiary hearing on the question of
personal jurisdiction, the burden is on the plaintiffs to establish a
prima facie
case of personal
jurisdiction over the nonresident defendants.
See Consol. Dev. Corp. v. Sherritt, Inc.
, 216 F.3d
1286, 1291 (11th Cir. 2000) (citing
Madara v. Hall
,
When a defendant submits affidavits contrary to the allegations in a complaint, the burden
shifts back to the plaintiff to produce evidence supporting jurisdiction unless the defendant’s
affidavits contain only conclusory assertions that the defendant is not subject to jurisdiction.
Meier
ex rel. Meier v. Sun Int’l Hotels, Ltd
.,
B. RICO Plaintiffs seek to establish jurisdiction over the foreign defendants under Rule 4(k)(1)(C), which would allow the Court to exercise pendent personal jurisdiction over the remaining state law claims. The Court therefore looks to this type of jurisdiction first. Because the parties agree that neither Grammer nor Daimler is “essentially at home in the United States” so as to confer general jurisdiction, the Court cannot establish general jurisdiction. Thus, the Court must determine whether there is a statutory and constitutional basis for exercising specific jurisdiction over each nonresident Defendant.
i) Jurisdiction Under RICO’s Nationwide Service of Process Provision
Under Rule 4(k)(1)(C), “[s]erving a summons or filing a waiver of service establishes
personal jurisdiction over a defendant . . . when authorized by a federal statute.”
[5]
See also Republic
of Pan.
,
Section 1965(d) can serve as “the statutory basis for personal jurisdiction.”
Id
. at 942
(citing
In re Chase & Sanborn Corp
.,
As courts have previously explained, determining whether claims are “colorable” is a
separate question from whether the claims are plausibly alleged under Rule 12(b)(6). . (citing
Am. Heritage Enters., Inc. v. Am. Paramount Fin., Inc.
, No. 10-80921,
With this high bar in mind, the Court finds that Plaintiffs have stated a “colorable” RICO
claim. As far as the Court can discern, dismissal on this basis only occurs where the claims are
frivolous, which is not the case here.
See, e.g., Dawkins v. Glover
, No. 08-00039, 2008 WL
11423996, at *4 (N.D. Ga. Aug. 14, 2008) (“Although it is often difficult to dismiss a claim for
lack of subject matter jurisdiction in these situations, dismissal is appropriate here. Not only are
plaintiff’s claims frivolous, many of the facts and arguments he presents are simply
unintelligible.”). This “limited finding” means only that Plaintiffs may “take advantage” of
RICO’s nationwide service of process provision such that it provides a statutory basis for
jurisdiction.
Republic of Pan.
,
Next, the Court must determine whether there is a constitutional basis for jurisdiction. When a federal statute or rule serves as the basis for personal jurisdiction, the “minimum contacts” analysis is governed by the Fifth Amendment of the United States Constitution, instead of the Fourteenth Amendment. Id . at 947. “[The] [C]ourt must therefore examine [Grammer and Daimler’s] aggregate contacts with the nation as a whole rather than [their] contacts with the forum state.” .; see also SEC v. Carrillo , 115 F.3d 1540, 1544 (11th Cir. 1997) (“[T]he applicable forum for minimum contacts purposes is the United States in cases where, as here, the court’s personal jurisdiction is invoked based on a federal statute authorizing nationwide or worldwide service of process.”).
To constitute minimum contacts for purposes of specific jurisdiction: [T]he defendant’s contacts with the applicable forum must satisfy three criteria. First, the contacts must be related to the plaintiff’s cause of action or have given rise to it. Second, the contacts must involve some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum . . . , thus invoking the benefits and protections of its laws. Third, the defendant’s contacts with the forum must be such that [the defendant] should reasonably anticipate being haled into court there.
Carrillo
,
Daimler does not contest its national contacts with the United States, as they insist that the
RICO claims are meritless. The Court must therefore accept Plaintiffs’ jurisdictional allegations
as true,
Consol. Dev. Corp.
,
As for Grammer, the analysis is slightly different because it has submitted evidence challenging Plaintiffs’ jurisdictional allegations. While reasonable inferences are still to be drawn in Plaintiffs’ favor, Plaintiffs must counter Defendants’ proffered evidence. See Meier , 288 F.3d at 1269. Although it is somewhat of a close call, the Court finds that Plaintiffs have shown sufficient contacts with the United States on the part of Grammer. In addition to placing an item in the stream of commerce, “[a]dditional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State.” Asahi Metal Indus. Co. v. Super. Ct. of Cal. , 480 U.S. 102, 112 (1987) (plurality opinion). Such is the case here.
Drawing all reasonable inferences in Plaintiffs’ favor, the evidence shows that although
Grammer often (but not always) ships its product to intermediate suppliers who then ship
completed car seats to Daimler, Grammer designs its products specifically so their customers can
sell them in the United States.
See
Resp., Ex. A. at 17. Indeed, Grammer performed tests on its
product that were meant to comply with unique American regulations, and such tests would not
have otherwise been required for other markets.
See id
. at 90. And Daimler specifically requested
of Grammer that technical specifications be made to comply with American regulations.
See id
.,
Ex. C at 24-25
; see also King v. Gen. Motors Corp.
, No. 11-02269,
Moreover, Grammer obtained U.S. patent and trademark protection to facilitate the sale of
the NECK-PRO in the United States. Resp., Ex. A at 92-93;
id
., Ex. B. at 110-13;
id.
, Exs. E, F,
G, & H. “It stands to reason that one who has sought and obtained a property interest from a U.S.
agency has purposefully availed itself of the laws of the United States.”
Touchcom, Inc. v. Bereskin
& Parr
,
“Once it has been established that a defendant has purposefully directed his activities at a
particular forum, courts still should determine if the assertion of personal jurisdiction would
comport with ‘fair play and substantial justice.’”
Republic of Pan.
,
The Court concludes that it has both a statutory and constitutional basis for jurisdiction
over all Defendants to consider Plaintiffs’ RICO claims. As a result, the “pendent personal
jurisdiction” doctrine comes into play, which would allow the Court to exercise personal
jurisdiction over the state law claims in this matter, which arise from the same set of facts, without
engaging in the traditional personal jurisdiction analysis.
See Leon v. Continental AG
, 301 F.
Supp. 3d 1203, 1231 (S.D. Fla. 2017) (quotations, alterations, and citations omitted);
see also
Action Embroidery Corp. v. Atl. Embrodiery, Inc.
, 368 F.3d 1174, 1180-81 (9th Cir. 2004)
(“Pendent personal jurisdiction is typically found where one or more federal claims for which there
is nationwide personal jurisdiction are combined in the same suit with one or more state or federal
claims for which there is not nationwide personal jurisdiction.”);
IUE AFL-CIO Pension Fund
, 9
F.3d at 1056 (“[U]nder the doctrine of pendent personal jurisdiction, where a federal statute
authorizes nationwide service of process, and the federal and state claims ‘derive from a common
nucleus of operative fact,’ the district court may assert personal jurisdiction over the parties to the
related state law claims even if personal jurisdiction is not otherwise available.”) (quoting
United
Mine Workers v. Gibbs
,
Crucially important here, “Plaintiffs’ RICO claim must survive a 12(b)(6) analysis if it is
to serve as the basis for the Court’s personal jurisdiction over Plaintiffs’ remaining state law
claims.”
Leon
,
ii) Failure to State a RICO Claim
Plaintiffs assert two federal RICO claims under 18 U.S.C. section 1962(c) and (d). Section
1962 makes it “unlawful for any person employed by or associated with any enterprise engaged
in, or the activities of which affect, interstate or foreign commerce, to conduct or participate,
directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering
activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). To state a claim under RICO,
Plaintiffs must plausibly allege that Defendants: “(1) operated or managed (2) an enterprise (3)
through a pattern (4) of racketeering activity that included at least two predicate acts of
racketeering, which (5) caused (6) injury to the business or property of the plaintiff.”
Cisneros v.
Petland, Inc.
,
Plaintiffs allege that Defendants and others operated an enterprise with the purpose of concealing the scope and nature of the defective AHRs found in “hundreds of thousands” of Mercedes vehicles in the United States in order to: sell more vehicles; sell them at a higher price or for a higher profit; and avoid incurring the expenses associated with recalling vehicles suffering from the defective AHRs. Plaintiffs allege predicate acts of mail and wire fraud, based on communications to consumers and the public touting the “safety” of the vehicles without disclosing the defect.
a. Rule 9(b) and 12(b)(6) Standards
To survive a 12(b)(6) 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
,
When reviewing a motion to dismiss pursuant to Rule 12(b)(6), a court must accept as true
all factual allegations contained in the complaint, and the plaintiff should receive the benefit of all
favorable inferences that can be drawn from the facts alleged.
See Chaparro v. Carnival Corp
.,
Although “the RICO statute provides that its terms are to be liberally construed to
effectuate its remedial purposes[,]”
Boyle v. United States
, 556 U.S. 938, 944 (2009), the
allegations must still pass muster under
Iqbal
and
Twombly
. Moreover, because the alleged
predicate acts sound in fraud, they must be pleaded with particularity under Federal Rule of Civil
Procedure 9(b).
Cisneros
,
b. Section 1962(c) Claim Defendants argue that Plaintiffs have failed to adequately plead the second and fourth elements of their section 1962(c) claim—that Defendants engaged in an (2) enterprise pertaining to (4) racketeering activity that included at least two predicate acts of racketeering. The Court addresses each in turn and agrees with Defendants that Plaintiffs’ allegations are insufficient to establish either element required to state a claim under RICO.
1.
Enterprise
[7]
Under the federal RICO statute, an “enterprise” is defined as “any individual, partnership,
corporation, association, or other legal entity, and any union or group of individuals associated in
fact although not a legal entity.” 18 U.S.C. § 1961(4). “In the simple case, the enterprise is an
‘individual, partnership, corporation, association, or other legal entity.’ The more challenging case
occurs when the enterprise is alleged to be a ‘union or group of individuals associated in fact
although not a legal entity.’”
Almanza v. United Airlines, Inc.
,
(2) Grammer’s officers and executives, who colluded with the other members of the enterprise to execute the alleged scheme; (3) The Mercedes Defendants, who designed, manufactured, and sold “millions of vehicles” that they knew or should have known contained the defective AHR while concealing and misrepresenting the existence of the defect;
(4) The Mercedes Defendants’ officers, executives, and engineers, who colluded to execute the scheme;
(5) Mercedes-Benz dealers, “who sold, leased, and serviced the Class Vehicles containing the [d]efective AHR, when they knew, or should have known, or recklessly disregarded the fact that the Class Vehicles contained the AHR”; and (6) The dealers’ officers and executives, “who have collaborated with each other and with other associates-in-fact in the Mercedes RICO Enterprise to deceive Plaintiffs and Class members into purchasing, leasing, and ‘repairing’ dangerous and defective vehicles and actively concealing the AHR defect.” FAC ¶ 230 a-f.
An “association-in-fact enterprise is simply a continuing unit that functions with a common
purpose.”
Boyle
,
Stripping away the conclusory allegations, the First Amended Complaint does not allege
concrete facts to give rise to a plausible inference that the various members of the alleged enterprise
acted with a
common
purpose, much less a fraudulent one. “The purpose prong contemplates ‘a
common purpose of engaging in a course of conduct’ among the enterprise’s alleged participants.
An abstract common purpose, such as a generally shared interest in making money, will not
suffice.”
Cisneros
,
Establishing a shared purpose requires more than alleging that all members of an enterprise acted in parallel and independently harbored a common improper motive. Rather, a plaintiff must allege, with enough factual detail, that members of the enterprise were actively collaborating to achieve that improper motive. For example, in Cisneros , the Eleventh Circuit found insufficient a “complaint [that] contain[ed] no allegations about specific interactions between [members of the alleged enterprise], nor allegations regarding the origins or scope of the alleged scheme. Rather, [the plaintiff] simply ask[ed] [the court] to speculate that [one defendant] decided at some point to pursue fraud, and that [the other defendants] were involved in that decision.” Id . at 1213. The court explained that the plaintiff “was required to allege not just that [the defendant] had a fraudulent purpose, but that it was a common purpose, formed in collaboration with [the other members of the enterprise].” Id . at 1213-14 (emphasis in original).
As in
Cisneros
, the First Amended Complaint here is devoid of allegations about “specific
interactions” between the various alleged participants in the alleged enterprise and utterly silent as
to “the origins or scope of the alleged scheme.” . at 1213. Plaintiffs allege that Grammer and
Mercedes learned of the defect at different times—Grammer in 2006 and Mercedes in 2008,
see
FAC ¶¶ 252b, 253—and generally allege that they “colluded and collaborated with each other and
with other associates-in-fact in the Mercedes RICO Enterprise to deceive Plaintiffs[,]” FAC ¶ 230.
But there are not enough concrete allegations to permit the Court to make a reasonable inference
that Plaintiffs acted together to conceal the defect in order to sell as many Class Vehicles as
possible. Thus, the First Amended Complaint impermissibly asks the Court to “speculate” that the
alleged participants collectively decided at some unknown point to pursue fraudulent automotive
sales.
Cisneros
,
The First Amended Complaint strongly resembles those that courts have found insufficient
to plead a RICO enterprise. For example, in
Leon
, the plaintiffs brought similar RICO claims
based on allegedly defective automobile airbags, and alleged that “from 2008 to 2016, the []
Defendants ‘were in regular contact’ about the defective [airbag control units].” 301 F. Supp. 3d
at 1235. The Court explained that such allegations “d[id] not mention who at each company was
in contact, what they were in contact about, or when, where, and how these communications
occurred and constituted a part of the scheme.”
Id.
Here, the First Amended Complaint similarly
“presents almost no detail—let alone the precise detail required by Rule 9(b)—to support the
notion that there was ‘a purpose, relationships among those associated with the enterprise, and
longevity sufficient to permit these associates to pursue the enterprise’s purpose.’” . (citing
Ray
v. Spirit Airlines, Inc.
,
The allegations here are particularly similar to those in
Shaw v. Nissan North America,
Inc.
, 220 F. Supp. 3d 1046 (C.D. Cal. 2016). There, the plaintiffs alleged that defendants had
participated in an enterprise “for the purpose of concealing the scope and nature of the . . . defects
in order to sell more Subject Nissan Vehicles” with the additional shared purpose of “maximiz[ing]
the revenue and profitability” through their design, manufacture, distribution, and testing of the
defective vehicles
. Id
. at 1054. The court held that plaintiffs’ complaint “only demonstrate[d] that
the parties ‘are associated in a manner directly related to their own primary business activities[,]’”
which is insufficient to state a claim under § 1962(c).
Id.
at 1057 (citing
In re Toyota Motor Corp.
Unintended Acceleration Mktg., Sales Practices, & Prod. Liab. Litig
.,
Critically, the Shaw court distinguished plaintiff’s complaint from other cases where complaints “include[] pages of references to specific communications [that] show[] the defendants acting as an enterprise and engag[ing] in a collaborative scheme to defraud.” Id . That the defendants at times reached “independent conclusions” about which remedial measures to take upon discovering the defect further swayed the court toward finding that plaintiffs had failed to plead the existence of a RICO enterprise with a common purpose. Id . Thus, as here, there was no evidence that the defendants acted together to accomplish a fraudulent purpose, as opposed to acting independently according to the terms of a normal business relationship.
Compare this to cases in which plaintiffs did adequately plead the existence of an enterprise. In Cardenas , for example, the Court denied the defendants’ motion to dismiss plaintiffs’ RICO claims relating to the alleged nondisclosure of an automobile defect, where with the headrests, it explicitly disclaims that there is an actual defect, noting instead that it “may be caused by damage to the seat wiring harness causing a short circuit.” . Thus, this communication in no way demonstrates a fraudulent common purpose.
plaintiffs had pleaded the existence of an enterprise that included Toyota entities, dealers, distributors, other third parties, and officers and agents of the other members. 418 F. Supp. 3d at 1101-02. In finding that the plaintiffs had plausibly alleged the existence of an enterprise, the Court found that the “[c]omplaint set[] forth numerous allegations, including specific communications between separate Toyota entities , showing the [members of the enterprise] had knowledge of the [d]efect, yet did not disclose, and actually concealed, the [d]efect from the public.” Id . at 1102 (emphasis added).
The details of those communications are in stark contrast to the complete absence of any such evidence of common purpose here. For example, one of the communications in Cardenas was an alleged dated message from a Toyota engineer to Toyota’s corporate offices explaining how the defect had been one of the top issues over the previous years; that Toyota had stopped servicing vehicles that exhibited the defect for fear of exposing themselves to legal liability; and that dealerships had “started to tell customers the [defective] condition was normal.” Id . at 1100. Another dated communication in the complaint was from Toyota’s American offices to their offices in Australia explaining that Toyota and its dealers were “hesitant” to attempt repairing the problems caused by the alleged defect because repairs would not fix the problem and would subject Toyota to legal liability. Id . Still another dated communication was from Toyota’s office in Kansas to a dealership that “provided standardized language to give complaining customers . . . [explaining] that the [problem] was not a defect, but rather, ‘an industrywide condition.’” Id .
Finally, the complaint included an allegation that a Toyota Pricing Manager had emailed
the National Product Planning Manager asking: “[I]f this is a known issue with a [Technical
Service Bulletin] for how to repair, why are we asking to charge customers . . . it does seem
challenging to explain why to get what a customer should expect as a standard condition for the
air conditioner (no odor) we charge more?” .;
see also In re Takata Airbag Prod. Liab. Litig.
,
MDL No. 2599, No. 14-24009,
Cardenas
makes clear just how inadequate the allegations of a common fraudulent purpose
are here. To be sure, the Court is not saying that a RICO plaintiff’s complaint
must
contain
evidence of communications between members of the enterprise in order to state a claim. But
what the complaints in
Cardenas
and other cases have—that the First Amended Complaint here
lacks—is any evidence of collective conduct outside the regular course of Defendants’ businesses,
which is required to establish a RICO enterprise.
See City of New York v. Chavez
, 944 F. Supp.
2d 260, 277 (S.D.N.Y. 2013) (granting motion to dismiss RICO claim because, like here, “there
[was] no allegation . . . of any symbiosis, of any meeting of the minds among the various actors
acting as a single unit, or of any reliance of any . . . actor on any other such actor.”). Without such
allegations, complaints like the one here describe only routine business affairs and are thus ripe
for dismissal because “[g]enerally, whether a RICO claim survives a motion to dismiss depends in
part on if it is supported by specific factual allegations that enable courts to rule out the innocent
explanation in favor of plaintiff’s fraudulent scheme hypothesis.”
Tam v. Quick Box, LLC
, No.
20-01082,
In sum, Plaintiffs have “alleged no facts that plausibly support the inference that the defendants [and their unnamed employees and associates] were collectively trying to make money in [automotive] sales by fraud , which is a common purpose sufficient to find a RICO enterprise, as opposed to the ‘obvious alternative explanation,’ that they were simply trying to make money in [automotive] sales, which is not . . . .” Cisneros , 972 F.3d at 1212 (first emphasis added). Accordingly, Plaintiffs have failed to adequately plead the existence of a RICO enterprise.
2. Pattern of Racketeering Activity Even if Plaintiffs had pleaded the existence of a RICO enterprise, they would still fail to state a valid RICO claim because they do not plead with particularity that Defendants engaged in a pattern of racketeering activity consisting of at least two predicate acts of fraud. See id . at 1215 (“Beyond establishing the existence of a RICO enterprise, a plaintiff must allege that each defendant participated in the affairs of the enterprise through a ‘pattern of racketeering activity,’ which requires ‘at least two acts of racketeering activity.”’) (quoting 18 U.S.C. §§ 1962(c), 1961(5)). The RICO Act defines racketeering activity comprehensively in 18 U.S.C. section 1961(1) to include a variety of enumerated criminal offenses.
In the First Amended Complaint, Plaintiffs cite two such offenses: mail fraud in violation
of 18 U.S.C. section 1341 and wire fraud in violation of 18 U.S.C. section 1343. FAC ¶ 240.
These crimes have the same elements and “occur[] whenever a person, ‘having devised or
intending to devise any scheme or artifice to defraud,’ uses the mail [or wires] ‘for the purpose of
executing such scheme or artifice or attempting to do so.’”
Bridge v. Phx. Bond & Indem. Co.
,
A “scheme to defraud” requires proof of a material misrepresentation, or the omission or
concealment of a material fact calculated to deceive another out of money or property. . (citing
United States v. Svete
,
RICO is not a run-of-the-mill consumer protection statute, as its goal “is to combat
organized crime, not to police routine commercial dealings.”
Ray v. Spirit Airlines
, 126 F. Supp.
3d 1332, 1341 (S.D. Fla. 2015),
aff’d
,
“To plead the necessary scienter for a racketeering claim premised on mail and wire fraud,
a plaintiff must allege that defendants ‘knowingly devised or participated in a scheme to defraud
plaintiffs’ and that they ‘did so willingly with an intent to defraud.’”
Cardenas
, 418 F. Supp. 3d
at 1102 (quoting
Langford v. Rite Aid of Ala., Inc.
,
Plaintiffs’ allegations of mail and/or wire fraud aver that Defendants represented the safety of their vehicles in communications transmitted via wire or the mail despite knowing that the headrests were defective. See, e.g. , FAC ¶¶ 241a-k. These communications—consisting primarily of one TSB, coupled with advertisements, brochures, owner’s manuals, and press releases—are insufficient to support predicate acts because the First Amended Complaint does not adequately set forth that Defendants knew of the defect and therefore intended to defraud Plaintiffs. See id . Plaintiffs insist in their Response that they have adequately alleged Defendants’ knowledge of the defect based on:
(1) Defendants’ involvement in the design and testing of the AHR systems, and choice to use a cheaper plastic instead of fiber- reinforced plastic. See FAC ¶¶ 3, 7, 11, 118, 144-48, 192.
(2) A TSB issued by Mercedes in October 2008 acknowledging the uncommanded 30 deployments and intentionally misattributing them to a wiring issue. See id . ¶¶ 160-62.
(3) NHTSA complaints filed between September 2013 and March 2018, which Mercedes monitored in the regular course of business. See id . ¶¶ 155-57.
(4) Consumer complaints on websites devoted to Mercedes vehicles between March 2013 and April 2019. See id. ¶¶ 158-59.
(5) Engineering design reports, pre-production testing, pre- production design failure mode analyses, manufacturing and design validation reports, plastic aging tests, ABS plastic data reports, aggregate warranty data, and repair order and parts data.
See id . ¶ 149. A survey of case law, however, demonstrates that there are deficiencies in each of these allegations, and they fare no better when considered in the aggregate. From the beginning, the First Amended Complaint seems to ask the reader to merely accept that Defendants knew or should have known of the AHR defect, rather than allege concrete facts on which a reader could reasonably infer that is the case.
First, the assertions regarding testing, reports, data, and analyses do not elaborate
whatsoever as to what that information actually showed, which means such allegations do not
make it more plausible that Defendants knew the AHR defect existed in hundreds of thousands of
vehicles. These allegations are precisely the kind of conclusory allegations that
Iqbal
and
Twombly
caution courts to disregard. Similar allegations were recently made in
Hall v. General Motors,
LLC
, No. 19-10186,
Likewise, in
Roe v. Ford Motor Co.
, the court found that plaintiffs’ allegations about “pre-
production testing, pre-production design failure mode analysis, and production design failure
mode analysis testing performed in response to consumer complaints” did little to establish that
the defendant knew or should have known of a defect.
Plaintiffs repeatedly mention that Defendants had exclusive knowledge of the defect, and
to be sure, the Court understands that Plaintiffs do not necessarily have access to Defendants’
internal product quality testing and other such records. Nonetheless, conclusory allegations are no
substitute for such knowledge. “To accept Plaintiffs’ general allegations about [Defendants]’
internal testing . . . is to create a presumption of knowledge on the part of any large manufacturer
of any alleged defect in its product line, and more than that, to assume that knowledge from some
unknown time after the product has been on the market. Even though knowledge allegations do
not require specificity pursuant to Rule 9(b), they cannot be speculative or conclusory—more is
required.”
Stewart v. Electrolux Home Prods., Inc.
, No. 17-01213,
Plaintiffs’ reliance on one TSB also fails to inch them any closer to adequately alleging
Defendants’ knowledge of the defect.
See
FAC ¶ 241b (“On . . . October 9, 2008, the Mercedes
Defendants transmitted a TSB to their dealerships titled ‘Restraints – Head Restraint Activate
Without Cause,’ which stated that the defective AHR ‘may be caused by damage to the seat wiring
harness causing a short circuit.’”). Generally, courts require more than one TSB to shed light on
Defendants’ knowledge of a defect.
Cf.
,
e.g.
,
Cardenas
,
More importantly, the TSB at issue explicitly disclaimed the notion that the problem with the headrest was caused by a defect in the plastic, stating instead that it “may be caused by damage to the seat wiring harness causing a short circuit.” FAC ¶ 161. [9] One lone TSB that fails to suggest the product is defective—much less reference the specific defect at issue—does not lend much, if any, support to the notion that Defendants knew or should have known that faulty headrest components were present in “hundreds of thousands,” id. ¶ 3, of vehicles.
Unfortunately for Plaintiffs, TSBs that only generally address the problem at hand are
rarely considered persuasive. Consider, for example,
Sloan v. General Motors LLC
, No. 16-
07244,
Once again, it is useful to compare Plaintiffs’ allegations to those cases in which TSBs
were found to sufficiently indicate knowledge. In one case, plaintiffs alleged the nondisclosure of
a defect in the defendant’s air conditioning systems that caused the systems to crack and leak
refrigerant, rendering the cars unable of providing cool air.
In re Gen. Motors Air Conditioning
Mktg. and Sales Practices Litig.
,
Finally, in
Pinon
, the court found that one TSB weighed in favor of finding defendant’s
knowledge of a defect.
The final pieces of alleged evidence relied upon by Plaintiffs to establish Defendants’
knowledge are the complaints made to the NHTSA, as well as those posted on internet fora.
“[C]onsumer complaints suffice to establish knowledge only where there were an
unusual
number
of complaints, such that the manufacturer would be on notice of a specific problem.”
Sloan
, 2017
WL 3283998, at *7 (citing
Williams v. Yamaha Motor Co.
,
Here, Plaintiffs’ allegations mirror almost precisely those made by the plaintiff in
Espineli
v. Toyota Motor Sales, U.S.A., Inc.
, No. 17-00698,
There is certainly no hard-and-fast rule on how many consumer complaints a plaintiff must
show to sufficiently plead a defendant’s knowledge; perhaps 12 examples could provide a
sufficient factual assertion in the proper case. But here, not only is it a very small number relative
to the “hundreds of thousands” of vehicles that supposedly have this defect, but, like the plaintiffs
in
Espineli
, Plaintiffs have offered no context as to how many complaints are normal such that
someone could infer they were more than a “blip on [Defendants’] radar.”
Roe
, 439 F. Supp. 3d
at 931 (“Plaintiffs have reproduced only 14 complaints to NHTSA about the [allegedly defective
product]. And these 14 span a three-year period. True, Plaintiffs say the 14 NHTSA complaints
are but a ‘small sample.’ But do Plaintiffs mean there are 50 more? 500 more? Their amended
complaint does not say.”). Indeed, even significantly more consumer complaints have been
deemed inadequate to establish knowledge if they are not sufficiently unusual to alert the
defendant.
See, e.g.
,
Gregorio v. Ford Motor Co.
, -- F. Supp. 3d --,
Plaintiffs contend that even if there are problems with these pieces of evidence independently, the evidence taken together as a whole supports a plausible inference that Defendants knew about the defect. True, the Court must look at the whole picture. But stripping away—as the Court must—the conclusory allegations relating to testing and various unspecified written and oral communications, the Court is left with the following: one TSB that disclaims a defect; 12 consumer complaints made over the span of six years (some of which post-date certain Plaintiffs’ purchases); and the allegations of two of the nine plaintiffs whose headrests have malfunctioned. That is simply not enough to reasonably infer that Defendants—large corporations that naturally encounter dozens (if not hundreds) of complaints about their vehicles every day— knew or should have known that the headrests in “hundreds of thousands” of vehicles were defective at the time of Plaintiffs’ purchase.
“Not every business fraud case is a RICO case.”
Cisneros v. Petland, Inc.
, 341 F. Supp.
3d 1365, 1372 (N.D. Ga. 2018),
aff’d in relevant part
,
c. Section 1962(d) Claim
Count II is a RICO conspiracy claim alleging that Defendants conspired to commit the
substantive RICO offense addressed above. A RICO conspiracy can be found through “the
conduct of the alleged participants or from circumstantial evidence of a scheme.”
United States v.
Browne
,
Such is the case here. Plaintiffs’ claim under section 1962(d) alleges that Defendants “conspired to violate 18 U.S.C. § 1962(c)” and points to the allegations made in Count I. FAC ¶¶ 250, 255. Accordingly, given that Plaintiffs have failed to adequately allege an association-in-fact enterprise or a pattern of racketeering activity, as explained above, their RICO conspiracy claim must also fail. Count II is therefore DISMISSED .
Because the federal law claims have been dismissed, jurisdiction under Federal Rule of Civil Procedure 4(k)(1)(C) is not applicable. And because Plaintiffs concede that the Court lacks jurisdiction over Grammer based on its contacts with Florida alone, Grammer is hereby DISMISSED . Consequently, Counts XII and XVI, which are brought only against Grammer, are DISMISSED .
C. Remaining State Law Claims
Had the Plaintiff adequately stated a RICO cause of action, the Court could have exercised
pendent personal jurisdiction over Defendants with respect to the state law claims without
engaging in the traditional personal jurisdiction analysis.
Koch
, 847 F. Supp. 2d at 1377-78.
However, because the only jurisdictionally sufficient claims have been dismissed, “it necessarily
follows that Plaintiffs’ pendent claims must also be dismissed.”
In re Takata Airbag Prod. Liab.
Litig.
,
The Court must “undertake a two-step inquiry to determine whether the exercise of
personal jurisdiction over a nonresident defendant is proper. First, [the Court] must determine
whether the state’s long-arm statute provides jurisdiction.”
PVC Windoors, Inc. v. Babbitbay
Const., N.V.
, 598 F.3d 802, 807 (11th Cir. 2010) (internal quotations and alterations omitted).
“Only where the long-arm statute provides jurisdiction [does the Court] proceed to the second step
and determine whether the defendant has minimum contacts with the forum state and, if it does,
whether the district court’s exercise of jurisdiction over that defendant would offend traditional
notions of fair play and substantial justice.”
Id.
Florida’s long-arm statute, section 48.193,
provides two ways in which a defendant may be subject to personal jurisdiction in Florida courts:
specific and general jurisdiction.
Waite v. All Acquisition Corp.
,
General jurisdiction is unavailable here, as the Supreme Court mandates that all-purpose
jurisdiction is typically available only where the defendant is incorporated or maintains its
principal place of business.
Daimler AG
,
As explained below, although the Court has personal jurisdiction over the claims brought by the Florida Plaintiffs, the inapplicability of Florida’s long-arm statute to the nonresident Plaintiffs’ state law claims mandates dismissal of said claims for lack of personal jurisdiction.
i) Nonresident Plaintiffs’ State Law Claims
When a suit is brought as a purported class action, personal jurisdiction over each defendant
is assessed with respect to the named plaintiffs’ causes of action.
See Lee & Branch Banking &
Trust Co.
, No. 18-21876,
Here, the named out-of-state Plaintiffs allege no connection with Florida whatsoever. Indeed, they are residents of North Carolina, New York, and California who did not purchase their Class Vehicles in Florida and did not suffer any injury in Florida. Thus, as conceded by the out- of-state Plaintiffs, Florida’s long-arm statute simply does not apply to them. See Resp. at 13-15 (arguing that the Florida long-arm statute provides a basis for personal jurisdiction only as to the Florida Plaintiffs’ claims). The inapplicability of Florida’s long-arm statute is fatal to the Court’s exercise of personal jurisdiction over the nonresident Plaintiffs’ state law claims. [13]
Because the Court cannot exercise personal jurisdiction over the nonresident Plaintiffs, Counts IV, V, VI, VII, VIII, IX, X, XI, and XII are DISMISSED . [14] Further, Count XV is DISMISSED as to nonresident Plaintiffs Monopoli, Fitzpatrick, Praglin, and Harris.
ii) Florida Plaintiffs’ State Law Claims
Remaining in this case are Counts III and XV. Count III asserts a violation of FDUTPA
against Daimler and MBUSA on behalf of Lewis, Gazie, Massa, Schwartz, and a Florida subclass.
Count XV asserts a claim for unjust enrichment against Daimler and MBUSA on behalf of the
Florida Plaintiffs.
[15]
In order to establish the Court’s personal jurisdiction over Daimler and
MBUSA, Plaintiffs must plead a
prima facie
case that Defendants are within the reach of Florida’s
long-arm statute.
See Leon
,
As explained above, the Florida long-arm statute provides two bases for the exercise of
personal jurisdiction: specific and general jurisdiction. The general jurisdiction provision, section
48.193(2), “extends to the limits on personal jurisdiction imposed by the Due Process Clause of
the Fourteenth Amendment.”
Fraser v. Smith
,
Plaintiffs rely instead on a theory of specific jurisdiction under sections 48.193(1)(a)(1),
(2), and (6) of the Florida Statutes. However, “[i]n Florida, before a court addresses the question
of whether specific jurisdiction exists under the long-arm statute, the court must determine
‘whether the allegations of the complaint state a cause of action.’”
PVC Windoors, Inc.
, 598 F.3d
at 808 (quoting
Wendt v. Horowitz
,
a. FDUTPA Plaintiffs Lewis, Gazie, Massa, Schwartz, and Wallach bring a claim against Daimler and MBUSA on behalf of a Florida subclass for violations of FDUTPA. They allege that Defendants’ misrepresentation, nondisclosure, and suppression of problems with the allegedly defective NECK-PRO constitute “unfair, unconscionable, and deceptive acts or practices.” F LA . S TAT . § 501.204(1). Defendants argue that three of the five Plaintiffs’ claims are barred by the statute of limitations, and the remaining claims fail on the merits. Mot. at 38-39.
1. Statute of Limitations The parties agree that the statute of limitations for FDUTPA claims is four years. F LA . S TAT . § 95.11(3)(f). “When a FDUTPA claim is based on a product purchase, the statute begins to run from the date of sale.” Fisher v. Harley-Davidson Motor Grp., LLC , No. 19-14154, 2019 WL 8014364, at *2 (S.D. Fla. Oct. 18, 2019) (citation omitted). This presents a problem for several Plaintiffs. Ms. Gazie bought her E350 Mercedes Benz in December 2011, FAC ¶ 23; Ms. Schwartz bought her C300 in August 2011, id . ¶ 33; and Mr. Wallach bought his E350 in April 2012, id . ¶ 27. As to all of these claims, the filing of this case in August 2019 was beyond the four-year statute of limitations. Plaintiffs, however, argue that Defendants’ fraudulent concealment of the defect tolls the statute. [16]
“Under Florida law, fraudulent concealment may toll the statute of limitations when a
defendant ‘engages in the willful concealment of the cause of action using fraudulent means to
achieve that concealment.’”
Fisher
,
Moreover, a defendant’s concealing conduct must occur after the plaintiff’s cause of action
has already accrued, which, in this case, occurred on the date of purchase.
In re Engle Cases
, No.
09-10000,
Applying these standards to FDUTPA claims stemming from alleged defects in motor vehicles, courts have consistently held that even assuming the defendants knew of the defect, the nondisclosure itself does not toll the statute of limitations. In Licul , the plaintiffs alleged that Volkswagen “‘ha[d] not publicized the defect to the public,’ ha[d] not ‘warned its customers of the defect’ . . . and ‘fail[ed] to notify Plaintiffs . . . of the [defect] in the [vehicles].’” 2013 WL 6328734 at *6 (quoting plaintiff’s complaint). “These allegations of Volkswagen’s inaction and non-disclosure [were] wholly insufficient to supply the affirmative steps taken to prevent [p]laintiffs from discovering the basis of their claims that would be necessary before tolling based on fraudulent concealment becomes appropriate.” . (citations omitted). Allegations of more “dastardly behavior, for example that Volkswagen ‘actively concealed and failed to disclose the [defect,]’” were also insufficient because they were conclusory and “devoid of actual facts showing Volkswagen’s purported intent or actions taken to conceal the defects[.]” Id. at *7.
Likewise, in
Fisher
, the plaintiffs alleged that defendant Harley-Davidson repeatedly
represented a defective product as effective in the defendant’s motorcycles via their user manuals,
advertisements, customer service interactions, and communications with its network of dealers.
The Court in Fisher made two other findings that are particularly salient here. First, the plaintiff alleged that Harley-Davidson’s customer service representative told him that the malfunction of his brakes was an “isolated incident.” Id . The court held that that such an allegation might suffice in other circumstances to support a claim for fraudulent concealment, but this phone call occurred after the statute of limitations had already expired. Id. Finally, plaintiff argued that a filing with the NHTSA in which Harley-Davidson stated that it was “conducting a study to gather [the allegedly defective products’] reliability data” was an affirmative representation that “there was no persistent failure of its product[,]” but the Court rejected this argument because “the language of the filing d[id] not bear such an inference.” .
Both Licul and Fisher make clear that the claims of Ms. Gazie, Ms. Schwartz, and Mr. Wallach are not saved by the doctrine of fraudulent concealment. Aside from the general claims throughout the complaint that Defendants “actively concealed” the AHR defect, Ms. Schwartz and Mr. Wallach do not plead any affirmative acts whatsoever, alleging only that “[p]rior to purchasing the[ir] vehicle[s], [they were] aware of, reviewed, or heard Mercedes’ warranties and advertisements publicizing its reputation for safety and reliability” and “[t]hese materials and advertisements did not disclose either that Mercedes had installed the Grammer headrests with the defective AHR or that the vehicle was not, in fact, fit for everyday use.” FAC ¶¶ 31, 34.
Like the allegations in Licul , Plaintiffs’ general claims of concealment fail because they are conclusory and, as explained above, unsupported by any factual assertions demonstrating affirmative steps taken to conceal the defect. Plaintiffs allege only two concrete acts of concealment. First, they allege that “Mercedes has taken affirmative steps to conceal this defect by, among other things, notifying NHTSA and dealers that the issue is a ‘short circuit’ in the wiring.” . ¶ 166. However, the TSB disclaims that the issue is a defect, and consequently, as in Fisher , the language of the TSB does not support the argument that it should be evidence of fraudulent concealment. Moreover, there is no factual support for the assertion that Defendants knew of the defect at the time the TSB was sent, and it necessarily follows that the TSB cannot amount to a misrepresentation. In any event, the TSB was sent in 2008, prior to all Plaintiffs’ purchases in this suit, and it therefore cannot provide a basis to toll the statute of limitations.
Likewise, the alleged misrepresentations in Defendants’ marketing materials amount to mere nondisclosure. And even if they did not, Plaintiffs do not allege that these materials played any role in preventing them from learning of their lawsuit after the FDUTPA claim accrued at the time of sale. Quite the opposite: Plaintiffs allege that they only relied on such materials before purchasing their vehicles. See Burr , 2012 WL 5290164, at *4 n.5 (“Fraudulent concealment concerns itself with a defendant’s conduct after it has injured a plaintiff and the defendant’s efforts to conceal the resulting claim the plaintiff might assert.”).
Ms. Gazie makes the same allegations as Ms. Schwartz and Mr. Wallach, but she also alleges that when she took her vehicle to an MBUSA dealership in June 2019 to have the headrest inspected, a service representative informed her that he could not provide any information about the inspection results and would not allow her to take her vehicle elsewhere until MBUSA had completed an investigation. FAC ¶ 174. As in Fisher , this conduct could perhaps, under different circumstances, constitute affirmative conduct sufficient to toll the statute of limitations. But these events took place in 2019—a full three-and-a-half years after the statutory period expired for her claims in December 2015 (based on her December 2011 purchase). Thus, her claims fare no better.
Accordingly, Count III is DISMISSED as to Plaintiffs Gazie, Schwartz, and Wallach. [17] 2. Sufficiency of FDUTPA Claim
The Court proceeds to address the FDUTPA claims of Mr. Lewis and Ms. Massa. A
consumer claim for damages under FDUTPA has three elements: (1) an objectively deceptive act
or unfair practice; (2) causation; and (3) actual damages.
Carriuolo v. Gen. Motors Co.
, 823 F.3d
977, 985-86 (11th Cir. 2016);
Rollins, Inc. v. Butland
,
In addition to the Rule 8(a) plausibility pleading requirement generally applied to a motion
to dismiss, the parties disagree as to whether Rule 9(b)’s particularity requirements apply to
Plaintiffs’ FDUTPA claims. There is a split of authority on this issue among courts in this District.
Compare Perret v. Wyndham Vacation Resorts, Inc.
,
This Court joins the latter line of cases in holding that the requirements of Rule 9(b) do not apply to claims under FDUTPA. As the Court explained in Harris :
FDUTPA claims seek a remedy for conduct distinct from traditional common law torts such as fraud. As such, the uniqueness of the cause of action place it outside the ambit of Rule 9(b). “FDUTPA is a remedial statute designed to protect consumers.” Fonte v. AT&T Wireless Servs., Inc. ,903 So. 2d 1019 , 1024 (Fla. 4th DCA 2005).
FDUTPA itself instructs courts to construe its provisions “liberally.” F LA . S TAT . § 501.202(2); see Intercoastal Realty, Inc. v. Tracy , 706 F. Supp. 2d 1325, 1333 (S.D. Fla. 2010). “FDUTPA was enacted to provide remedies for conduct outside the reach of traditional common law torts such as fraud,” Guerrero v. Target Corp. , 889 F.
Supp. 2d 1348, 1355 (S.D. Fla. 2012); Florida v. Tenet Healthcare Corp. ,420 F. Supp. 2d 1288 , 1310 (S.D. Fla. 2005), which is why a FDUTPA “plaintiff need not prove the elements of fraud to sustain an action under the statute.” Davis v. Powertel, Inc. ,776 So. 2d 971 , 974 (Fla. 1st DCA 2000). And, as Florida courts explain, “[a] deceptive or unfair trade practice constitutes a somewhat unique tortious act because, although it is similar to a claim of fraud, it is different in that, unlike fraud, a party asserting a deceptive trade practice claim need not show actual reliance on the representation or omission at issue.” Office of A.G., Dep’t of Legal Affairs v.
Wyndham Int’l, Inc ., 869 So. 2d 592, 598 (Fla. 1st DCA 2004). Therefore, even where a FDUTPA claim includes allegations which implicate fraudulent conduct, it need not meet the heightened pleading requirements of Rule 9(b).
A review of the statute, as interpreted by the Florida Supreme Court, makes clear that
knowledge of a deceptive act is not required to state a claim under FDUTPA. “The Florida
Supreme Court teaches that a deceptive act occurs when ‘there is a representation, omission, or
practice that is likely to mislead the consumer acting reasonably in the circumstances, to the
consumer’s detriment.’ Thus, the Act focuses on whether an act is deceptive, not whether a
defendant knew that the allegedly violative conduct was occurring.”
Gavron
, 819 F. Supp. 2d at
1302 (quoting
PNR, Inc. v. Beacon Prop. Mgmt., Inc.
,
Moreover, as
Gavron
pointed out, FDUTPA explicitly states that in deciding what is a
“deceptive or unfair” act, “due consideration and great weight shall be given to the interpretations
of the Federal Trade Commission and the federal courts relating to . . . the Federal Trade
Commission Act . . . .”
Finally, the statute’s provision regarding civil penalties makes clear that not all “deceptive
or unfair acts” that give rise to liability under the statute are
knowingly
deceptive or unfair. Section
501.2075 permits an “enforcing authority” to recover a penalty of “not more than $10,000 for
each . . . violation” if the court finds that the person or entity has willfully used a method, act, or
practice found to be an unfair or deceptive act under section 501.204. F LA . S TAT . § 501.2075.
“Willful violations occur when the person
knew or should have known
that his or her conduct was
unfair or deceptive or prohibited by rule.” . (emphasis added). If all conduct that was “unfair
or deceptive” under the statute required knowledge that such acts were unfair or deceptive, then
the entire previous sentence would be superfluous. But much like the United States Supreme
Court’s guidance regarding federal law, the Florida Supreme Court has cautioned that in
interpreting Florida law, “courts are required to give significance and effect to every word or
phrase in a statute.”
Polite v. State
,
Even if one thought that the Florida Legislature intended to allow civil penalties for all violations of the statute, that would be incompatible with the attorney’s fees section, which provides fees to any “prevailing party” in FDUTPA litigation. See F LA . S TAT . § 501.2105(1). When the Florida Legislature wishes to grant fees for any violation, it knows just how to do it. And the Florida Legislature also knows how to provide a good faith defense when it wants to. See F LA . S TAT . § 501.211(2) (providing that damages are not available against a “retailer who has, in good faith, engaged in the dissemination of claims of a manufacturer or wholesaler without actual knowledge that it violated this part.”).
The Court thus concludes that knowledge of a deceptive act is not required to state a claim
under FDUTPA. This means Plaintiffs do not need to allege that Defendants were aware that the
NECK-PRO was defective in order for Defendants’ misrepresentations regarding the product to
constitute “unfair or deceptive” acts.
See Gavron
,
Turning now to Plaintiffs’ FDUTPA allegations, the Court finds that the Plaintiffs have stated a claim for relief. Plaintiffs allege that Defendants engaged in unfair and deceptive trade practices by representing that the Class Vehicles have safety features that they do not have and representing that the Class Vehicles are of a particular standard, quality, or grade, when they are not. FAC ¶ 264a-b. They state further that “[h]ad they been aware of the defect that existed in the headrests in Class Vehicles, [they] either would have paid less for their vehicles or would not have purchased or leased the vehicle.” . ¶ 274. Taken as true, these allegations satisfy all three elements of a FDUTPA claim, as they are supported by enough factual assertions regarding the plausible existence of the defect itself.
These representations are deceptive because they are likely to mislead a reasonable consumer into believing that the NECK-PRO is safe when it is not. See In re Horizon Organic Milk Plus DHA Omega-3 Mktg. and Sales Prac. Litig. , 955 F. Supp. 2d 1311, 1332 (S.D. Fla. 2013) (“Plaintiffs’ allegations that [defendant] represents on its products’ labels and in its advertising that [an ingredient] in its products ‘supports brain health’ when the [ingredient] in its products actually do[es] not support brain health are sufficient to allege a ‘deceptive act’ under the FDUTPA because these alleged misrepresentations are likely to mislead a reasonable customer into believing that the [ingredient] in [defendant]’s products supports brain health.”); Feiner v. Innovation Ventures LLC , No. 12-62495, 2013 WL 2386656, at *3 (S.D. Fla. May 30, 2013) (finding defendant’s representations that its 5-Hour Energy product would provide five hours of energy without a crash when it actually did not so perform was “deceptive because they [were] likely to mislead a reasonable consumer into believing that 5-[H]our Energy would last for five hours with producing a crash.”).
With respect to causation, Defendants argue that Plaintiffs’ FDUTPA claim must fail
because they do not allege they viewed any specific advertisements that contained alleged
misrepresentations or omissions. But this argument has been squarely rejected, as federal courts
and Florida courts alike have stated that “FDUTPA does not require a plaintiff to prove actual
reliance on the alleged conduct.”
Cold Stone Creamery, Inc. v. Lenora Foods I, LLC
, 332 F. App’x
565, 567 (11th Cir. 2009) (quotation omitted);
see also Carriuolo
, 823 F.3d at 985 (“General
Motors is incorrect to suggest that the plaintiffs must prove that every class member saw the sticker
and was subjectively deceived by it. As the district court correctly observed, these arguments
simply seek a reliance inquiry by another name.”);
Vazquez v. Gen. Motors, LLC
, No. 17-22209,
“Instead of actual reliance, a plaintiff must simply prove that ‘the alleged practice was
likely to deceive a consumer acting reasonably in the same circumstances.’”
BPI Sports v.
Labdoor, Inc.
, No. 15-62212,
Finally, Plaintiffs adequately plead damages. “[U]nder Florida law, a plaintiff who alleges
that he or she has paid a premium price for a product as a result of a defendant’s misrepresentation
has pled damages under FDUTPA.”
Marty v. Anheuser-Busch Cos., LLC
,
In sum, Mr. Lewis and Ms. Massa have adequately pleaded a prima facie case under FDUTPA. Thus, the Motion is DENIED as to these Plaintiffs’ FDUTPA claims in Count III.
b. Unjust Enrichment The second and final claim remaining for the Florida Plaintiffs is that of unjust enrichment in Count XV. This doctrine applies only where (1) the plaintiff conferred a benefit on the defendant, who had knowledge of the benefit; (2) the defendant voluntarily accepted and retained the benefit; and (3) under the circumstances, it would be inequitable for the defendant to retain the benefit without paying for it. Shands Teaching Hosp. & Clinics, Inc. v. Beech Street Corp ., 899 So. 2d 1222, 1227 (Fla. 1st DCA 2005).
These claims fail for two reasons. First, the statute of limitations for unjust enrichment is
four years, and therefore, for the same reasons that their FDUTPA claim is time-barred, the unjust
enrichment claim of Ms. Gazie, Mr. Wallach, and Ms. Schwartz is time-barred.
See Merle Wood
& Assocs., Inc. v. Trinity Yachts, LLC
,
In addition, the unjust enrichment claim of Mr. Lewis and Ms. Massa also fails because it
is based on precisely the same conduct as their FDUTPA claim. “It is well settled in Florida that
unjust enrichment is an equitable remedy and is, therefore, not available where there is an adequate
legal remedy.”
Am. Honda Motor Co., Inc. v. Motorcycle Info. Network, Inc.
, 390 F. Supp. 2d
1170, 1178 (M.D. Fla. 2005). As a result, unjust enrichment claims are unavailable where they
are based, as here, on precisely the same allegedly deceptive conduct that forms the basis of a
FDUTPA claim.
See id
. (“The [d]efendants’ quasi contract claim is predicated on the same set of
allegations supporting their claims under [] FDUTPA. Accordingly, because an adequate remedy
exists at law, the Defendants have not stated a claim upon which relief may be granted for . . .
unjust enrichment.”). Although Plaintiffs believe they should be permitted to bring these claims
in the alternative, courts do not allow alternative pleading in these circumstances.
Koski v. Carrier
Corp.
,
“[I]f [Defendants] [] employed a deceptive or unfair trade practice that caused Plaintiffs
damages, then Plaintiff[s] ha[ve] a remedy at law as a properly pled claim under Florida law. In
other words, although a plaintiff ordinarily may plead in the alternative, here, if Plaintiff[s] cannot
prevail with [their] available legal remedies, [they] cannot prevail on [their] unjust enrichment
claim.”
Jovine v. Abbott Laboratories, Inc.
,
Accordingly, Count XV is DISMISSED .
c. The Florida Long-Arm Provisions Having assessed the sufficiency of Plaintiffs’ state-law claims, the Court moves to the jurisdictional analysis under Florida’s long-arm statute. Because Daimler clearly lacks sufficient Florida contacts to justify the exercise of general jurisdiction, the Court cannot simply look to Daimler’s various contacts with Florida in the aggregate. Rather, it must carefully examine Plaintiffs’ claims to determine whether they have met their burden of establishing specific personal jurisdiction over Daimler with respect to each claim. See Weiner , 2019 WL 7708494, at *3. Plaintiffs allege that Daimler is subject to personal jurisdiction under subsections (a)(1), (2), and (6) of the Florida long-arm statute. Those subsections provide, in relevant part, that a non-resident is subject to jurisdiction in Florida for “any cause of action arising from any” one of the following acts:
(1) Operating, conducting, engaging in, or carrying on a business or business venture in this state or having an office or agency in this state.
(2) Committing a tortious act within this state.
(6) Causing injury to persons or property within this state arising out of an act or omission by the defendant outside this state, if, at or about the time of the injury, either:
a. The defendant was engaged in solicitation or service activities within this state; or
b. Products, materials, or things processed, serviced, or manufactured by the defendant anywhere were used or consumed within this state in the ordinary course of commerce, trade, or use.
F LA . S TAT . § 48.193(1)(a)(1), (2), (6).
As an initial matter, Plaintiffs cannot rely on subsection (6). “It is well settled that allegations of economic injury alone do not establish the type of injury to persons or property within Florida required to establish personal jurisdiction pursuant to Section 48.193(1)(a)(6). Instead, this provision of the long-arm statute contemplates personal injury or physical property damage within the State of Florida.” Leon , 301 F. Supp. 3d at 1216 n.7 (citations omitted). Because Plaintiffs allege only economic injuries, Defendants cannot be subject to jurisdiction under subsection (6).
Nevertheless, the Court has specific jurisdiction over Daimler for Plaintiffs’ FDUTPA
claim pursuant to subsection (2). “The Supreme Court of Florida previously has held that
allegations of a defendant’s violation of the Florida Deceptive and Unfair Trade Practices Act is a
tortious act in Florida for the purpose of Fla. Stat. § 48.193(1)[(a)(2)].”
Rogers v. Omni Solution,
Inc.
, No. 10-21588,
Following such guidance, courts in this district have held that where plaintiffs adequately
plead their FDUTPA claim and allege an injury in Florida, jurisdiction lies under subsection (2)
of the Florida long-arm statute.
Weiner
,
So too here. Plaintiffs have adequately alleged that Defendants engaged in “deceptive and unfair” conduct in violation of FDUTPA by representing that their vehicles have a safety feature that they do not in fact have—and misrepresenting that the vehicles are of a certain quality or grade when they are not. Mr. Lewis and Ms. Massa, as Florida residents who purchased their vehicles in Florida, allege that their economic injury occurred in Florida. As a result, jurisdiction is proper under section (1)(a)(2) of the Florida long-arm statute.
iii) Federal Due-Process Considerations
Having assured itself of the statutory basis for jurisdiction, the Court next turns to the
constitutional inquiry. Because it is a state statute that serves as the basis for jurisdiction, the Court
looks to the Due Process Clause of the Fourteenth Amendment. Such an analysis requires
consideration of whether: (1) the plaintiff’s claims “arise out of or relate to” at least one of the
defendant’s contacts with the forum; (2) the non-resident defendant “purposefully availed” itself
of the privilege of conducting activities within the forum; and (3) the exercise of personal
jurisdiction comports with “traditional notions of fair play and substantial justice.”
Louis Vuitton
Malletier, S.A. v. Mosseri
,
Plaintiffs allege that Daimler, which markets itself to American consumers as Mercedes Benz, took a number of actions directly aimed at selling its vehicles in Florida. They allege that Daimler, together with its wholly-owned subsidiary MBUSA, designed and manufactured the Class Vehicles for sale in Florida, and developed, reviewed, and approved marketing and advertising campaigns designed to promote the NECK-PRO system and sell the class vehicles in Florida. FAC ¶¶ 65, 67.
Further, Plaintiffs claim that Daimler maintains a unity of interest with MBUSA and does not distinguish itself from MBUSA for purposes of selling and leasing Mercedes-branded vehicles and providing related services in the United States. Id. ¶ 69. The relationship between Daimler and MBUSA is purportedly governed by a General Distributor Agreement that gives Daimler the right to control nearly every aspect of MBUSA’s operations, including the sales and marketing of the class vehicles. Id . ¶ 67. Pursuant to that agreement, Daimler has allegedly directed the actions of MBUSA’s marketing and representations made to consumers, including consumers in Florida, about the AHR defect in Class Vehicles. . ¶¶ 65, 67, 68, 71. Specifically, Daimler and MBUSA worked to develop the owner’s manuals, product brochures, advertisements, and other promotional materials related to the NECK-PRO system, with the intent that those materials and advertisements be disseminated in all 50 states, including Florida. Id . ¶¶ 72, 81.
Plaintiffs also allege that Daimler licensed its trademarks to dealerships in Florida, engaged in the financing of dealerships in Florida that sold its vehicles, and—through its control of MBUSA—managed a distribution network by which its vehicles were physically brought to Florida for sale or lease. Id . ¶¶ 76, 79. Daimler has allegedly sent its employees, managers, and officers regularly to Florida to facilitate the sale and service of its vehicles, and Daimler also advertises its connection to Florida on its website, representing that its Jacksonville, Florida parts distribution center “supports dealers in the region with parts supply and houses parts inventory.” . ¶¶ 64, 83.
Presented with these allegations, the Court turns to the three prongs comprising the due process analysis.
a. Arise Out of or Relate To Defendants argue that Daimler’s contacts with Florida do not satisfy this prong because there is no nexus between the contacts and Plaintiffs’ claim. Mot. at 12. For example, Defendants believe it is of no moment that Daimler—albeit through MBUSA—maintains offices and a parts distribution center in Florida because Plaintiffs do not allege that the defective AHR systems in the vehicles they purchased originated from this distribution center. The Supreme Court has made clear, however, that this prong is not quite this stringent.
The Eleventh Circuit has previously “held that a tort ‘arises out of or relates to’ the
defendant’s activity in a state only if the activity is a ‘but-for’ cause of the tort.”
Waite
, 901 F.3d
at 1314 (quoting
Oldfield v. Pueblo De Bahia Lora, S.A
.,
In
Ford
, the plaintiffs were injured in the forum states in car accidents involving the
defendant’s vehicles, but the actual vehicles at issue were not designed, manufactured, or sold in
the forum states.
Id
. at *3. Nevertheless, the defendant still had contacts with the states that were
related to the plaintiffs’ claims because the defendant had advertised, sold, and serviced those two
car models in both states for many years.
Id
. at *7. “In other words, Ford had systematically
served a market in [the forum states] for the very vehicles that the plaintiffs allege malfunctioned
and injured them in those States.”
Id
. Therefore, there was “a strong ‘relationship among the
defendant, the forum, and the litigation’—the ‘essential foundation’ of specific jurisdiction.” .
(quoting
Helicopteros
,
Here, Plaintiffs’ allegations as to Daimler—which are uncontradicted and thus must be
accepted as true at this stage,
Madara
,
b. Purposeful Availment
The second prong requires that “there . . . exist ‘some act by which the defendant
purposefully avails itself of the privilege of conducting activities within the forum . . ., thus
invoking the benefits and protections of its laws.’”
Oldfield
,
Daimler has purposefully availed itself of jurisdiction in Florida because it directed the distribution of its vehicles to the state, targeted Florida consumers through advertising, and sold Florida residents its cars through its distributor MBUSA at dealerships in Florida. This is not the case of mere “placement of a product into the stream of commerce, without more.” Asahi , 480 U.S. at 112. Indeed, Justice O’Connor observed that examples of “something more” than mere placement of an item into the stream of commerce that would establish purposeful availment include “designing the product for the market in the forum State,” and/or “marketing the product through a distributor who has agreed to serve as the sales agent in the forum State.” . at 112-13 (O’Connor, J., concurring). Daimler has allegedly done both of those here.
Although the Court recognizes that Daimler and MBUSA are legally separate entities, this
does not insulate Daimler from a finding that it has purposefully availed itself of the privileges and
responsibilities of conducting business in Florida. Many courts have held that a foreign
manufacturer that utilizes an American subsidiary to target distribution of its product to the forum
state are appropriately subject to those states’ jurisdiction.
See, e.g.
,
Young v. Mitsubishi Motors
N. Am. Corp.
, No. 19-02070,
Daimler’s utilization of its subsidiary MBUSA to cultivate business in Florida, which included licensing its trademarks to MBUSA as well as to dealerships in the State of Florida, properly subject Daimler to the jurisdiction of Florida courts. See Patterson v. Home Depot, USA, Inc. , 684 F. Supp. 2d 1170, 1183 (D. Ariz. 2010) (holding that a foreign corporate defendant purposefully availed itself of the privileges of conducting activities in the forum state because the company placed its design for the defective product into the stream of commerce and directed that design toward U.S. consumers by establishing an American subsidiary and giving that subsidiary a license to disseminate products manufactured in accordance with an allegedly defective design). Thus, Plaintiffs have alleged enough facts to plausibly infer that Daimler purposefully availed itself of jurisdiction in Florida to answer a claim related to its representations regarding the safety of its NECK-PRO product.
c. Fair Play and Substantial Justice
Even where a defendant has purposefully established minimum contacts with the forum
state, the Court must still evaluate jurisdiction in light of several other factors to determine whether
the exercise of jurisdiction comports with “traditional notions of fair play and substantial justice.”
Meier
,
Daimler has not attempted to argue—and therefore has not presented the requisite
“compelling case”—that this Court’s exercise of jurisdiction over it would be constitutionally
unfair.
Diamond Crystal Brands, Inc. v. Food Movers Int’l, Inc.
,
CONCLUSION Although Plaintiffs have standing to bring this lawsuit, they do not have standing to represent a nationwide class for claims based on state law. Moreover, the Court is without subject matter jurisdiction to hear Plaintiffs’ claim under the Magnuson-Moss Warranty Act because this suit is brought as a class action with less than 100 named plaintiffs.
Defendants Grammer and Daimler have sufficient minimum contacts with the United States for the Court to consider the RICO claims against all Defendants. However, Plaintiffs’ allegations fail to state a RICO claim, so those claims must be dismissed and cannot serve as a jurisdictional anchor through which the Court could exercise pendent personal jurisdiction over the remaining state law claims. Plaintiffs must establish an independent basis for personal jurisdiction for their remaining state law claims, and because Plaintiffs concede that Grammer lacks sufficient contacts with the State of Florida for the Court to exercise jurisdiction over Grammer for any of the state law claims, Grammer must be dismissed from this suit.
As to Daimler and MBUSA, the nonresident Plaintiffs’ claims have no connection to Florida, so the Court is without jurisdiction over those claims. The Florida Plaintiffs, conversely, are able to establish personal jurisdiction, but only the FDUTPA claims of Mr. Lewis and Ms. Massa are not barred by the statute of limitations. Those Plaintiffs’ allegations state a claim under FDUTPA, but because that claim provides an adequate legal remedy, they cannot proceed on their unjust enrichment claim that is based on the same alleged conduct by Defendants.
Accordingly, it is hereby ORDERED AND ADJUDGED as follows: 1. Defendants’ Renewed Motion to Dismiss Plaintiffs’ First Amended Complaint [ECF No. 66] is GRANTED IN PART .
2. Counts I, II, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, and XVI are DISMISSED . To be clear, the only remaining claim is Count III—Plaintiffs’ FDUTPA claim—which may be pursued by Plaintiffs Lewis and Massa against Defendants Daimler and MBUSA. 3. This case is set for a status conference on April 14, 2021 at 2:00 p.m.
DONE AND ORDERED in Fort Lauderdale, Florida, this 30th day of March, 2021. _________________________________ RODOLFO A. RUIZ II UNITED STATES DISTRICT JUDGE
Notes
[1] Daimler AG, The Best or Nothing – Mercedes-Benz , Y OU T UBE (June 10, 2010), https://www.youtube.com/watch?v=HkV2dflBvcA.
[2] “A Technical Service Bulletin is a document disseminated internally that informs Mercedes technicians how to diagnose and repair the identified problem.” Suddreth v. Mercedes-Benz, LLC , No. 10-05130, 2011 WL 5240965, at *1 n.3 (D.N.J. Oct. 31, 2011).
[3] Some courts espousing the opposite view have noted that courts upholding the MMWA’s numerosity
requirement “do not consider—at least not explicitly—whether a federal court could ever be a ‘court of
competent jurisdiction in any State.’”
Barclay
,
[4] Defendants believe that Plaintiffs’ RICO claims are “invalid” and thus “irrelevant to the jurisdictional
analysis.” Reply at 3. But the “general rule” is that courts “address issues relating to personal jurisdiction
before
reaching the merits of a plaintiff’s claims.”
Republic of Pan. v. BCCI Holdings (Luxembourg) S.A.
,
[5] As Daimler waived service, see [ECF No. 14] ¶ 3, and MBUSA and Grammer were served summonses, [ECF Nos. 6, 19], the first requirement of Rule 4(k)(1)(C)—service of summons or waiver of service—has been satisfied.
[6] As a domestic corporation, MBUSA does not contest this Court’s jurisdiction regarding Plaintiffs’ federal claims, aside from challenging the claims on the merits.
[7] The Court reviews Plaintiffs’ allegations of a RICO enterprise under the Rule 8 standards as articulated by the Supreme Court in Twombly and Iqbal . Some courts have concluded that Plaintiff’s entire RICO claim should be subject to the heightened specificity required by Rule 9(b). See, e.g. , Leon , 301 F. Supp. 3d at 1233 n.20. To be sure, there is some support for this conclusion under Eleventh Circuit case law. See Am. Dental Ass’n ,605 F.3d at 1291 (explaining that plaintiff’s “substantive RICO allegations must comply with . . . Fed. R. Civ. P. 9(b)’s heightened pleading standard.”). However, in their latest RICO decision, the Eleventh Circuit applied Rule 9’s heightened requirement only to the plaintiff’s allegations of predicate RICO acts sounding in fraud. Cisneros ,972 F.3d at 1215 .
[8] The one alleged communication that is perhaps sufficiently detailed is a TSB the Mercedes Defendants sent their dealerships in October 2008. FAC ¶ 161. But while that communication mentions a problem
[9] Plaintiffs allege that in the TSB, Defendant took affirmative steps to conceal the defect by blaming the short circuit in the wiring. See, e.g. , FAC ¶ 166. But such an accusation is wholly conclusory without first sufficiently alleging—which they do not— that Defendants knew or should have known that the headrest malfunction was due to a defect.
[10] Because the claims at issue rest on the notion that the manufacturer was aware of the defect at the time
the vehicles were purchased, only complaints
before
purchases were made are relevant to Defendants’
knowledge.
Wilson v. Hewlett-Packard Co.
,
[11] Some courts have held that the mere existence of customer complaints is insufficient without a plausible
allegation that the defendant actually saw the complaints.
Compare Gotthelf v. Toyota Motor Sales
,
U.S.A.,
Inc.
,
[12] The general jurisdiction provision of Florida’s long-arm statute provides jurisdiction over any claims
against “[a] defendant who is engaged in substantial and not isolated activity within [Florida].” F LA . S TAT .
§ 48.193(2). Section 48.193(2)’s “substantial and not isolated activity” requirement is “the functional
equivalent of the continuous and systematic contact requirement for general jurisdiction under the
Fourteenth Amendment” to the United States Constitution.
Meier
,
[13] As noted by Defendants, the Court’s lack of personal jurisdiction is further confirmed by the Supreme
Court’s decision in
Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County
, 137
S. Ct. 1773 (2017). There, a group of plaintiffs with no connection to California filed a tort action in
California state court seeking damages from injuries caused by a drug manufactured by the defendant.
Id.
at 1778. The Court held that exercising personal jurisdiction over the drug manufacturer as to those claims
brought by the non-resident plaintiffs violated due process because there was no “connection between the
forum and the [non-residents’] specific claims.” . at 1781. Further, “[n]othing in
Bristol-Myers
suggests
that it does not apply to named plaintiffs in a putative class action; rather, the Court announced a general
principle—that due process requires a connection between the forum and the specific claims at issue. That
principle applies with equal force whether or not the plaintiff is a putative class representative.”
Feldman
,
[14] Although Plaintiffs do not attempt to raise this argument, the Court notes that the pendent personal
jurisdiction doctrine would not permit the Court to exercise jurisdiction over the nonresident Plaintiffs’
claims just because they are related to other Plaintiffs’ claims over which the Court might have jurisdiction.
The doctrine only allows parties over whom the Court can exercise jurisdiction to bring additional claims
that lack an independent basis for jurisdiction. In other words, the doctrine only allows for the addition of
claims
, not parties.
See Story v. Heartland Payment Sys., LLC
,
[15] Count XV was originally brought on behalf of all Plaintiffs and a national class, but the Court has dismissed the nationwide class allegations as well as the nonresident Plaintiffs. See Sections I.A(ii), II.C(i), supra .
[16] The doctrine of delayed discovery, under which the statute of limitations begins to run when “the facts
giving rise to the cause of action were discovered or should have been discovered with the exercise of due
diligence,” does not apply to FDUTPA claims.
Martin v. World Wide Child Care Corp.
, No. 17-80188,
[17] Mr. Lewis bought one of his two C250s in April 2015. FAC ¶ 20. Any FDUTPA allegations relating to this purchase are also barred by the statute of limitations. However, because he also purchased one of his vehicles in November 2016, there is no need to dismiss his FDUTPA claim on this basis.