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Fiat Chrysler Must Face Emissions-Cheating Claims

A federal judge on Thursday refused to dismiss a nationwide class action accusing Fiat Chrysler of selling more than 100,000 "EcoDiesel" trucks tainted with emissions-cheating software. 

SAN FRANCISCO (CN) - A federal judge on Thursday refused to dismiss a nationwide class action accusing Fiat Chrysler of selling more than 100,000 "EcoDiesel" trucks tainted with emissions-cheating software.

Facing the same claims that cost Volkswagen more than $20 billion in U.S. fines and settlements, Fiat Chrysler asked a federal judge to dismiss the multidistrict litigation last year. The carmaker argued that consumers' claims of fraud and racketeering are pre-empted by federal law because only U.S. regulators can police emissions rules.

U.S. District Judge Edward Chen rejected that argument Thursday, finding consumers' claims are based on alleged fraud and deceit, not the violation of environmental rules.

"The fraud claims here do not arise 'solely by virtue of' noncompliance with [Clean Air Act] emissions rules; they arise out of the alleged deceit practiced on consumers by defendants," Chen wrote in his 134-page ruling.

However, the judge dismissed state-law warranty claims, finding them "entirely predicated on compliance with federal emissions standards" and therefore pre-empted by federal law.

The class accuses Fiat Chrysler of installing emissions-cheating software in nearly 104,000 Grand Jeep Cherokees and Ram 1500 EcoDiesel trucks between 2014 and 2016.

Fiat Chrysler allegedly used defeat devices created by German auto parts maker and co-defendant Robert Bosch to mask nitrogen dioxide pollution during emissions tests. The cars spew up to 20 times more pollution on the road than when hooked up for tests, according to the plaintiffs' 378-page complaint.

The automaker said the plaintiffs lack standing to sue because they failed to identify specific advertisements touting the trucks as environmentally friendly. The consumers must show they relied on such representations when they bought the trucks, Fiat Chrysler contended.

Chen scoffed at that argument, finding no authority requires consumers to identify ads they relied on to establish standing. Even if such a requirement existed, Chen said the plaintiffs would easily satisfy it.

"One does not need to look far to find this representation: as alleged, it appeared on the class vehicles themselves, which each had an 'EcoDiesel' logo that used a leaf and green coloring," Chen wrote.

The carmaker argued the "EcoDiesel" label was mere puffery, not a specific statement that any reasonable consumer could rely on when buying a truck.

Chen found "the record is sparse" on whether a reasonable consumer could rely on the label as meaning the trucks spew less pollution. That dispute must be resolved at a later stage of litigation, he said.

The judge also dismissed with leave to amend consumer-protection claims for plaintiffs in Iowa and Mississippi. Both states require state attorney general approval to file such claims, he found.

Chen further dismissed consumer-protection claims for Kentucky plaintiffs because that state requires consumers have a direct contractual relationship with the defendant, not a third-party intermediary like a car dealer.

The judge also found the plaintiffs cannot sue co-defendant Robert Bosch, who manufactured the illicit defeat devices, for aiding and abetting a Racketeer-Influenced Corrupt Organizations Act conspiracy. That's because aiding and abetting is only a criminal offense with no civil liability attached to it, he found.

Chen refused to dismiss all other claims of warranty, fraud and racketeering.

The plaintiffs say they paid $3,120 to $5,000 more for the trucks than they otherwise would have because of the EcoDiesel label.

Last December, attorneys told Judge Chen they would begin extensive settlement talks early this year and that the EPA was working with the automaker to approve a potential emissions fix for the 104,000 trucks.

Attorneys for the plaintiff class and Fiat Chrysler did not immediately return emails and phone calls seeking comment Friday afternoon.

Jessica Thompson, of Hagens Berman Sobol Shapiro in Seattle, represents the class; Amie Vague, of Lightfoot Franklin & White in Birmingham, Alabama, represents Fiat Chrysler.

Follow @NicholasIovino
Categories / Business, Consumers, Environment

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