Mercedes Buyers Corner Automaker on Defeat Devices

NEWARK, N.J. (CN) – Finding that the class improved allegations he had previously found wanting, a federal judge advanced a lawsuit that accuses Mercedes-Benz of misleading consumers about its line of clean diesel cars.

Vehicles make their way westbound on Interstate 80 across the San Francisco-Oakland Bay Bridge as seen from Treasure Island in San Francisco on Dec. 10, 2015. (AP Photo/Ben Margot, File)

Rejecting a motion to dismiss by the automaker and German engineering company Bosch, U.S. District Judge Jose Linares said Thursday that purchasers had adequately alleged fraud and violations of federal anti-racketeering law.

As alleged in the complaint, “defendants worked together to design, manufacture, distribute, test, and sell the polluting vehicles, while implanting the EDC17 [defeat device], falsifying emissions tests, and distributing deceptive marketing materials,” Linares wrote. “These allegations sufficiently allege a purpose of the enterprise.”

The complaint picking up steam has been amended four times already. In dismissing an earlier iteration, Linares found that consumers failed to state that misleading advertisements or the Mercedes-Benz website had induced their vehicle purchases. 

The class alleges that Mercedes marketed its BlueTEC line of “clean diesel” vehicles as environmentally friendly, but that emissions controls shut down in cooler temperatures, making them in some cases dirtier than gasoline-running vehicles.

Mercedes marketed its BlueTEC diesel engine as “the world’s cleanest and most advanced diesel,” with ultra-low emissions and high fuel economy. It claimed its engines converted nitrogen oxide emissions into harmless nitrogen and oxygen, making it at the time among the lowest CO2-emitting luxury vehicles on the market.

While BlueTEC vehicles’ nitrogen-reducing systems worked well during emissions tests, however, the complaint says those controls turned off, thanks to “defeat device” programming, in real-world settings when ambient temperatures dropped below 50 degrees Fahrenheit.

Road tests showed that the vehicles “emit dangerous oxides of nitrogen at a level more than 65 times higher than the United States Environmental Protection Agency permits,” the complaint states.

Consumers claimed they overpaid for the supposedly clean cars, and that Mercedes and Bosch had conspired to submit fraudulent permit applications to the EPA that falsely claimed the vehicles complied with emissions standards.

Among other defenses to the RICO claims, Mercedes asserted that any actions taken to fool regulators did not necessarily deceive purchasers.

Linares found, however, that “active concealment” from Mercedes and Bosch regarding the EDC17 defeat device “amounts to taking advantage of the plaintiffs’ ignorance.”

Class counsel Steve Berman said in a statement he was pleased with the ruling. 

“Like Volkswagen, Mercedes tried to scam consumers by green-washing its line of diesel cars,” Berman said. “With the help of some crafty marketing, and Bosch’s defeat device, the duo set out to rake in profits from unknowing purchasers.”

Berman is a named partner at Hagens Berman, which won a $14.7 billion settlement with Volkswagen over similar allegations in 2016.

In an email Monday, Mercedes spokesman Robert Moran focused on the counts that were unsuccessful.

“We believe that these claims are without merit, and we are pleased that the court recognized the deficiencies in some of plaintiffs’ claims,” Moran said.

Bosch spokeswoman Alissa Cleland declined to comment on the ruling, citing a policy regarding pending litigations, but she affirmed that “Bosch is cooperating with the continuing investigations in various jurisdictions.”

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