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BMW Pumps Brakes

Law 360 has reported that on Thursday a New Jersey federal judge rejected a bid by BMW North America to escape proposed class claims that it fraudulently concealed engine defects which shortened certain vehicles’ battery life and caused increased oil consumption.

U.S. District Judge Madeline Cox Arleo was unpersuaded by BMW’s arguments that a group of vehicle owners from seven states hadn’t demonstrated any particular, concrete harm stemming from the alleged defects.

On the contrary, Judge Arleo said, the consumers alleged they suffered economic injuries in the form of diminished resale value of their vehicles and out-of-pocket costs to buy extra oil and replacement batteries, not to mention time spent taking their vehicles to BMW repair centers.

“Plaintiffs have alleged injuries that have already occurred, as well as imminent future injury,” the judge wrote. “Accordingly, they have satisfied Article III’s injury in fact requirement.”

What’s more, those supposed injuries all qualify as quantifiable losses, Judge Arleo said, therefore BMW cannot dismiss the group’s consumer fraud allegations based on a failure to allege loss.

Nor was the automaker able to convince the judge that the group cannot pursue nationwide class claims based on alleged violations of New Jersey’s Consumer Fraud Act. That argument appeared to be a premature predominance challenge, which was better left for the class certification stage, Judge Arleo wrote.

Representatives for the parties on Friday didn’t immediately return requests for comment.

Vehicle owners including California resident Joon Bang sued BMW in September 2015, and filed a consolidated amended complaint in March, claiming the company hid from consumers the battery and oil defects that existed in vehicles containing its “N63” engine, which posed serious risk of accidents and injury.

First, the consumers alleged that the N63 engine consumes excessive amounts of oil, leading to a need for frequent oil changes to prevent “catastrophic engine damage or failure” and avert potentially life-threatening accidents should the engine seize up.

The owners also alleged that the same N63 engine vehicles also suffered from premature battery failure because of the battery’s proximity to the turbochargers inside the engine, which leads to overheating.

The group claims BMW knew of these issues before they sold the cars, and have since heard from several consumers through complaints to the National Highway Traffic Safety Administration, leading the automaker to offer free oil changes and battery replacements.

However, those are mere temporary fixes that don’t solve the root of the problem, and won’t be available once the vehicles’ warranties expire, leaving consumers to pay future bills for new batteries and oil, their complaint alleged.

In its April motion to dismiss, BMW argued that the group’s breach of express and implied warranty and Magnusson-Moss Warranty Act violation claims all failed because it fulfilled its warranty obligations by replacing the allegedly broken parts.

Judge Arleo on Thursday said whether BMW’s actions were enough to satisfy the warranty is a question of fact that cannot be resolved at the dismissal stage, keeping those claims alive as well.

The case is Joon Bang v. BMW of North America LLC et al., case number 2:15-cv-06945, in the U.S. District Court of New Jersey. A full copy of the complaint can be accessed here.

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