Products Liability Law Daily Wrap Up, DESIGN AND MANUFACTURING DEFECTS—MOTOR VEHICLES—N.D. Ga.: Suit against Mercedes-Benz over panoramic sunroofs moves forward, (Jan 14, 2025)

By Brian Craig, J.D.

The court saw “little reason” to dismiss claims simply because consumers could not “divine the byzantine inner workings of a corporate conglomerate.”

In a proposed class-action lawsuit filed against automobile manufacturer Mercedes-Benz over allegedly defective panoramic sunroofs that would spontaneously shatter, the federal district court in Atlanta, Georgia has held that consumers can proceed with their claims alleging breach of implied warranty, fraud, unjust enrichment, and other state law claims. In largely denying Mercedes-Benz’s motion to dismiss, the court held that consumers complied with requirements for implied warranty claims by giving pre-suit notice to Mercedes-Benz USA, LLC, which acts as the sole distributor for Mercedes-Benz vehicles in the United States and is wholly owned by the parent company Mercedes-Benz Group AG based in Germany. In denying the fraud claims, the court saw “little reason” to dismiss claims simply because consumers could not “divine the byzantine inner workings of a corporate conglomerate” (Bolling v. Mercedes-Benz USA, LLC, No. 1:23-CV-671-TWT (N.D. Ga. Jan. 10, 2025)).

Consumers that purchased or leased certain Mercedes-Benz vehicles filed a lawsuit in the federal district court in Atlanta against Mercedes-Benz USA, LLC (“MBUSA”), the sole distributor for Mercedes-Benz vehicles sold in the United States, as well as the parent company and vehicle manufacturer Mercedes-Benz Group AG (“MBG”) based in Germany. The consumers allege defective panoramic sunroofs in certain Mercedes-Benz vehicles would spontaneously shatter under normal driving conditions. The consumers seek to represent a class on behalf of consumers that purchased or leased certain vehicles, as well as state-specific subclasses in Georgia and Alabama. The consumers allege claims for breach of implied warranty, fraud, unjust enrichment, violation of the Magnuson-Moss Warranty Act, breach of express warranty, and other state law claims. After the court dismissed the Magnuson-Moss Warranty Act claim, the parent company and manufacturer MBG moved to dismiss several claims.

Implied warranty. The court first held that the consumers plausibly allege breach of implied warranty claims individually and on behalf of the Alabama and Georgia sub-classes. Both Alabama and Georgia law require pre-suit notice to the defendant in a breach of implied warranty claim. Here, the consumers gave pre-suit notice to the U.S.-based distributor MBUSA rather than the manufacturer MBG based in Germany. The court rejected the manufacturer’s arguments that the consumers failed to comply with pre-suit notice requirements.

The consumers have sufficiently alleged an agency relationship between MBUSA, the U.S. distributor of Mercedes-Benz vehicles, and MBG, the parent company and manufacturer. The complaint alleges that MBUSA is sole distributor in the United States, identifies the specific agreement that gives MBG the right to control MBUSA, and describes MBG as having 100 percent ownership stake in MBUSA. Furthermore, the court rejected MBG’s argument that the consumers failed to allege privity between the consumers and the manufacturer MBG based in Germany.

Fraud. The court also held that consumers can proceed with their claims alleging fraud. The fraud-based claims include fraudulent concealment as well as alleged violations of the Georgia Fair Business Practices Act, the California Consumer Legal Remedies Act, and the fraudulent prong of the California Unfair Competition Law. The court concluded that the California consumers have plausibly alleged a duty to disclose under the California Consumer Legal Remedies Act and the California Unfair Competition Law. MBG owns 100 percent of MBUSA and has a right to control MBUSA pursuant to distributor agreement. All of MBG’s counsel of record also represent MBUSA. There is little risk that the manufacturer MBG has not had proper notice of the claims against it. The court saw “little reason” to dismiss claims simply because consumers could not “divine the byzantine inner workings of a corporate conglomerate.” In addition, the consumers plausibly pled scienter and that the manufacturer had knowledge of the alleged defect.

Unjust enrichment. Next, the court found that some of the consumers plausibly allege claims for unjust enrichment. The court agreed with the manufacturer and dismissed the unjust enrichment claims with respect to consumers whose express warranty claim has not been dismissed and therefore the existence of a valid contract between the parties is undisputed. But consumers who do not have or never had an express warranty claim can go forward with their unjust enrichment claims.

Other state law claims. Finally, the court held consumers plausibly allege claims under the Alabama Deceptive Trade Practices Act and the California Unfair Competition Law. Under the Alabama Deceptive Trade Practices Act, there is only a pre-suit notification requirement here if the manufacturer maintains a place of business or keeps assets within the state of Alabama. For the same reasons as the fraud-based claims are plausibly alleged, the consumers adequately allege pre-sale knowledge against the manufacturer under the California Unfair Competition Law.

Therefore, the court largely denied the vehicle manufacturer’s motion to dismiss.

The case is No. 1:23-cv-00671-TWT.

Judge: Thrash, T.

Attorneys: Eric David Barton (Wagstaff & Cartmell, LLP) for Natalie Bolling, Shawn Hale, Joseph Dedman, Latoya Foster-Gittens, Aaron Majette and Lisa Phlegar. Dana Lynn Cook-Milligan (Winston & Strawn LLP) for Mercedes-Benz USA, LLC and Mercedes-Benz Group AG.

Companies: Mercedes-Benz USA, LLC; Mercedes-Benz Group AG

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