Class Action Suit Filed Against Mercedes Over 3G Internet Compatability
A federal class action lawsuit was filed Thursday against Mercedes-Benz in the Northern District of Illinois. The Complaint brings suit on behalf of Jim Rose, of Illinois; Anita Gian, of New York; and similarly situated individuals. Specifically, individuals who purchased Mercedes vehicles which were equipped with the “MBRACE” systems in their vehicles.
A variety of Mercedes models included this technology, ranging from models created in 2000, up to certain models from 2017; the 2017 models included some of the most expensive offerings, like the G-Class Coupe, S-Class cabriolet, and the S65 AMG. The Complaint alleges however that the technology became effectively obsolete, when wireless carriers upgraded and removed 3G capability in 2022.
The MBRACE system uses 3G connection to report emergencies, and phone roadside assistance. While this system was primarily offered in the more expensive Mercedes-Benz models, the technology was not prepared for the transition away from 3G by wireless carriers. As a result, the high tech systems allegedly no longer was functional.
The Complaint alleges that “no later than 2012,” Mercedes-Benz was aware, or should have been aware, that the system would become obsolete. The German car company did not publicly acknowledge that the system would become obsolete until 2021. The Complaint alleges that not only did Mercedes fraudulently conceal this information, but that it had a contractual obligations to remedy the situation by repairing or replacing the system, as outlined in the warranty offered with its vehicles.
The alternative offered by Mercedes is for people to purchase the “Verizon Hum,” at their own expense, with their own hardware, and with data or subscription fees on their own dime. The Complaint also notes that this system was designed in 2015, but it has been 4G compatible since then.
An interesting component of the factual elements of the Complaint is that it goes into previous instances where Mercedes similarly was “behind the eight ball” when it comes to adapting to technology. The Complaint references a 2008 class action settlement, In re: Mercedes-Benz Tele Aid Contract Litigation. That case involved technology offered by the manufacturer from 1999 through 2006. That technology relied on analogue systems, which the FCC announced in 2002 would be eventually phased out.
Despite this announcement, Mercedes did not seize selling the analogue depending technology until 2006, two years prior to its obsolescence.
The Complaint alleges several distinct causes of action.
The first cause of action is an alleged violation of the Magnusson-Moss Warranty Act. The Act applies to warranties for consumer products, ultimately requiring that any warranties provide detailed information about what is covered. A company which fails to cover what is expressly stated, may run afoul of this 1975 statute.
The second cause of action is an alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The Complaint makes reference to several provisions of the Act, including language pertaining to “deceptive, fraud, false pretense . . . misrepresentation or concealment . . . omission of material fact . . .” that is likely to “deceive or mislead a reasonable consumer.” Ill. Comp. Stat. Section 505/2.
The third cause of action is brought under the Illinois Uniform Deceptive Trade Practices Act. This Act runs very similarly to the Consumer Fraud and Deceptive Business Practices Act, and incorporates many of the same sorts of alleged violations. This Act uses language such as “false statements, misrepresentations, and omissions,” but these must be tied to factors like the “characteristics, quality, and source of goods and services in a manner that is likely to deceive or mislead a reasonable customer.” 815 ILCS Section 510/2/.
The primary distinction between counts two and three is that count two applies to the likelihood to deceive a consumer, whereas the statute relied upon in count three requires that the “deception be grounded in characteristics, quality, and source of goods or services.”
The fourth cause of action is for Breach of Express Warranty, a sate law claim which applies when a merchant sells good, a warranty is offered, and said warranty is not followed. 810 ILCS Section 5/2-313 & 5/2A-210.
The fifth cause of action is for Breach of Contract / Common Law Warranty, brought under Illinois common law. The Complaint alleges Mercedes had a contractual obligations, and its warranty, by refusing to cure the defects cause by the obsolete technology included in the MBRACE system.
The sixth cause of action is Fraud By Concealment, also brought under Illinois common law. This portion relies upon Mercedes’ representations that its vehicles were among the safest, yet it made no disclosure that this program would become obsolete.
The seventh cause of action is Unjust Enrichment, also brought under Illinois common law. This is grounded in the company’s knowledge that the technology would become obsolete, yet it did nothing, changed, nothing, and fixed nothing; according to the Complaint.
The eighth cause of action is brought under the New York General Business Law Section 349. This allegation is characterized by material misrepresentations made about the safety, reliability, and durability of its vehicles; and that Mercedes materially concealed facts about the “imminent obsolescence” of MBRACE.
The ninth cause of action is for False Advertising, brought under Section 350 of the New York General Business Law. This allegation is also based on the same above alleged material misrepresentations, but it also alleges that this caused deceptive and misleading advertising; and that these deceptions were likely to mislead a reasonable consumer.
The tenth cause of action alleges Breach of Express Warranty, brought under New York statute. This allegations stems from the fact that Mercedes offered a Limited Warranty on its vehicles, and that because the MBRACE system was defective, it had a duty under the warranty to repair.
The eleventh cause of action is for Breach of Contract / Common Law Warranty, based on New York common law. These allegations are largely the same as Count five, which brought forward the same allegations, but under Illinois common law.
The twelfth cause of action is for Fraud by Concealment, brought under New York Common Law. This count largely mirrors count six, which was for the same tort under Illinois common law.
The thirteenth and final cause of action is for Unjust Enrichment, brought under New York common law. This cause of action largely mirrors the seventh count of the Complaint, which alleged the same under Illinois common law.
In all, the Complaint seeks to have damages awarded to the entirety of the class. The Plaintiffs have demanded a trial by jury, and they are not seeking a specific amount in damages at this point.
This class action complaint is particularly interesting especially as it pertains to the notion of “planned obsolescence.” While companies like Apple have often been criticized, for example, for its operating systems which eventually render previous versions unusable, the allegations here apply to continued sales even when the company is said to have known its features would no longer operate. This is definitely a case to keep an eye on.