Hamm v. Mercedes-Benz USA, LLC

Background

Terry Hamm and Steven Chan brought a claim under California’s Consumer Legal Remedies Act against Mercedes-Benz USA, LLC, alleging that the company knew about and concealed defects in the conductor plate used in certain 722.9 vehicle transmissions. Hamm sued individually, and Chan sued individually and on behalf of a proposed class. The proposed class consisted of California owners and lessees of Mercedes-Benz vehicles equipped with a 722.9 7G Tronic transmission who had not received free repairs or replacement of that transmission from Mercedes-Benz or its agents.

Earlier rulings eliminated Hamm’s claim for equitable relief and his claim under California’s Unfair Competition Law. The court also previously denied Hamm’s motion for class certification because of concerns about reliance and other issues. The fourth amended complaint added Chan as a class representative and renewed the request for equitable relief.

Chan bought a fourteen-year-old 2006 E350 from his neighbors in 2020 for $7,000. The vehicle had approximately 100,000 miles. About two years later, it became stuck in low gear and entered “Limp Mode.” A scan showed transmission-related codes. Two mechanics later inspected the vehicle for purposes of the litigation; neither found an issue with the valve body or conductor plate. Mercedes-Benz’s inspection concluded that the symptoms were consistent with wear and tear, including worn clutch packs.

Motion to Dismiss

Mercedes-Benz sought dismissal of Chan’s requests for equitable relief and his request for monetary relief under the Consumer Legal Remedies Act. The court granted the motion as to equitable relief. It reiterated that monetary damages were an adequate remedy for the alleged injury, including repair costs, replacement costs, or diminished vehicle value. The court also concluded that the complaint improperly sought equitable and monetary relief for the same injury without showing why monetary relief was inadequate.

The court denied the motion as to Chan’s claim for monetary relief. Although the court found that some allegations were thin and that the complaint improperly included a subscription-service theory that plaintiffs represented was included by mistake, it held that the remaining allegations were sufficient at the pleading stage. The complaint alleged that Chan owned the vehicle, Mercedes-Benz had an opportunity to disclose the alleged defect, Mercedes-Benz did not disclose it, Chan would not have bought the vehicle had he known of the defect, and he was harmed by owning a vehicle with diminished value. The court also found that the allegations supported treating Chan as a consumer and that whether the transmission failed prematurely was a factual question for later proceedings.

Summary Judgment

The court granted Mercedes-Benz’s motion for summary judgment on Chan’s Consumer Legal Remedies Act claim. Summary judgment is appropriate when the evidence shows no genuine dispute over a fact that could affect the outcome and the opposing party lacks evidence sufficient for a reasonable factfinder to rule in its favor.

The court relied on two facts. First, it found no genuine dispute that Chan’s vehicle had a VGS3, or third-generation, conductor plate when he bought it. Computer downloads confirmed the VGS3’s presence, and plaintiffs offered no vehicle-specific evidence showing that another generation was installed. The court found that evidence about which conductor plate had originally been installed in vehicles of the same model year did not establish which part was in Chan’s vehicle years later, particularly because the vehicle had undergone repairs before Chan bought it.

Second, the court found no evidence that the VGS3 conductor plate was defective. Plaintiffs’ expert had planned to determine whether there was a defect by comparing different conductor-plate generations, but plaintiffs did not submit a completed analysis or other evidence establishing a defect. The court emphasized that, after discovery had ended, a plan to produce evidence was not enough to defeat summary judgment. Because the court granted summary judgment on this basis, it did not address Mercedes-Benz’s remaining arguments concerning reliance and damages.

Class Certification and Disposition

The court denied plaintiffs’ renewed motion for class certification. Because summary judgment eliminated Chan’s claim and Chan was the only named class representative, the proposed class had no remaining representative. The court stated that it could not grant class certification without a named class representative.

The court therefore granted in part and denied in part Mercedes-Benz’s motion to dismiss, granted Mercedes-Benz’s motion for summary judgment as to Chan’s claims, and denied plaintiffs’ motion for class certification.