United States District Court, D. Kansas
RONALD AND MELODY LAROE, individually, and on behalf of those similarly situated, Plaintiffs,
FCA US, LLC f/k/a CHRYSLER GROUP, LLC, et al., Defendants.
MEMORANDUM AND ORDER
D. Crabtree United States District Judge.
matter comes before the court on defendants FCA US, LLC
(“FCA US, ” f/k/a/ Chrysler Group), and ZF North
America, Inc.'s (“ZF NA”) Motions to Dismiss
(Docs. 100 & 102). Plaintiffs Ronald and Melody LaRoe,
individually, and on behalf of those similarly situated, have
filed their Fourth Amended Complaint (Doc. 95) in this case.
This filing-like its predecessors-alleges that defendants
acted in concert to defraud owners of some 320, 000 vehicles
manufactured by FCA US. Specifically, plaintiffs allege that
defendants' scheme involved defective wire harnesses
placed in some-but not all-FCA US-manufactured vehicles. The
Fourth Amended Complaint substantially reduces the claims
that plaintiffs assert. It merely claims that defendants
violated the Racketeering Influenced and Corrupt
Organizations Act (“RICO”). As they argued in
previous Motions to Dismiss (Docs. 42 & 62), defendants
contend that plaintiffs do not have standing to assert their
claim. See Doc. 101 at 19-21; Doc. 103 at 16- 18.
reasons explained below, the court again concludes that
plaintiffs lack standing to bring the RICO claim asserted in
their Fourth Amended Complaint. But, exercising its
discretion, the court grants plaintiffs leave-one last
time-to amend their Fourth Amended Complaint if they choose
to do so.
section briefly summarizes the procedural history culminating
in plaintiffs' Fourth Amended Complaint. Then, it
outlines the Fourth Amended Complaint's alleged facts
pertinent to the court's analysis of plaintiffs'
standing to assert their RICO claim.
filed their Second Amended Complaint (Doc. 41) after the
court granted their unopposed Motion seeking leave to file
their amended complaint. See Docs. 39 & 40. FCA
U.S. and ZF NA both filed Motions to Dismiss (Docs. 42 &
62), arguing in part that plaintiffs lacked standing to bring
their claims and moving to dismiss the claims, in part, under
Federal Rule of Civil Procedure 12(b)(1).
court agreed with defendants. The Second Amended Complaint
hadn't asserted that plaintiffs had sustained any damages
arising from the malady that the allegedly defective wire
harness could cause-i.e., an unexpected shift in
gear that “could” cause a collision. See
Doc. 41 at 9 (internal quotations omitted). Also, the Second
Amended Complaint didn't allege any problems with
plaintiffs' car that were “‘fairly
trace[able]'” to actions by defendants. Doc. 85 at
14 (quoting Clapper v. Amnesty Int'l USA, 568
U.S. 398, 408 (2013)). The court also rejected
plaintiffs' argument that their injury included the
diminished value of their vehicle. See Id. at 16
(citing Tae Hee Lee v. Toyota Motor Sales, U.S.A.,
Inc., 992 F.Supp.2d 962, 972-73 (C.D. Cal. 2014).
Tae Hee Lee held that “claims of
‘diminished value' and ‘overpayment'
[are] only allowed to proceed for those plaintiffs who had
pled ‘something more,' [e.g., ] having
stopped using vehicles for fear of personal safety or having
sold or traded-in vehicles at a loss due to depressed resale
values following recalls and publicized alleged
incidents”). And the court found Tae Hee
Lee's reasoning persuasive.
court also granted plaintiffs leave to file another amended
complaint. Plaintiffs responded with a mechanical error of
their own, filing the wrong version of an amended complaint.
See Doc. 94 (explaining that plaintiffs had filed
the wrong document as their Third Amended Complaint (Doc.
88)). So, the court granted plaintiffs additional time to
file a Fourth Amended Complaint-and it is that fourth
generation Complaint that is before the court now.
Fourth Amended Complaint
Fourth Amended Complaint makes allegations quite similar to
those included in the Second Amended Complaint. But, it
changes the theory of liability: plaintiffs assert only a
RICO violation, and they allege economic losses as their only
considers defendants' motions to dismiss, the court
accepts, of course, facts asserted by the Fourth Amended
Complaint (Doc. 95) as true and views them in the light most
favorable to plaintiffs. Burnett v. Mortg. Elec.
Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir.
2013) (citing Smith v. United States, 561 F.3d 1090,
1098 (10th Cir. 2009)).
Allegations about all affected vehicles
model years 2014 to 2016, the Fourth Amended Complaint
alleges, FCA U.S. manufactured at least 320, 000 cars and
SUVs with defective sensor wire harnesses (collectively,
“affected vehicles”). The wire harness at issue
is a component inside the nine-speed transmission. This wire
harness transmits electrical currents, which ultimately
control which gear the automatic transmission selects, and
when it selects that gear. The Fourth Amended Complaint
alleges that the wire harnesses are defective because they
were manufactured with insufficient wiring crimps, which hold
a group of wires in the harnesses together snugly and thus
maintain conductivity and connectivity. A wiring crimp
defect, plaintiffs allege, can cause electrical resistance to
become too great; if that happens, a vehicle's
transmission can shift into neutral suddenly during normal
Fourth Amended Complaint also alleges that ZF NA knew the
root cause of the defect by July 10, 2014. FCA U.S. knew
about the defect “well before” July 2016. Doc. 95
at 5. And, the Fourth Amended Complaint alleges, FCA U.S.
knew about the defect “likely significantly
earlier” than it informed the National Highway Traffic
Safety Administration (“NHTSA”) of the problem.
Id. In July 2016, FCA U.S. submitted a Safety Recall
Report to NHTSA under 49 C.F.R. Part 573. Id. at 11,
11 n.14. In this report, FCA U.S. informed NHTSA that
“‘[s]ome . . . vehicles may have insufficient
crimps in the transmission wire harness that may cause an
unexpected shift to neutral resulting in a sudden loss of
motive power.'” Id. at 11 (quoting FCA
US's Initial 49 C.F.R. Part 573 Report to NHTSA,
submitted on July 12, 2016) (ellipsis in original). (For
simplicity, this Order calls this report to NHTSA the
“Part 573 Report.”) The report from FCA U.S. also
explained, “‘[T]he remedy program for this recall
is under development.'” Id. at 13 (quoting
Part 573 Report). FCA U.S. included a draft Recall Notice
with the Safety Recall Report.
FCA U.S. sent the Recall Notice to owners of the affected
vehicles. This notice described the wire harness problem in
The transaxle wire harness on your vehicle may have been
built with insufficient wire terminal crimp(s). This may
cause an intermittent high electrical resistance in the
transaxle wire harness circuit(s). A high resistance
circuit(s) in this wiring harness will cause the on-board
diagnostic system to set a Diagnostic Trouble Code (DTC).
When the DTC is set, the system defaults the transaxle to
neutral and the customer experiences a loss of motive power.
Motive power can usually be regained upon a restart. The loss
of motive power could cause a crash without warning.
Id. at 11 (quoting Interim Recall Notice for Safety
Recall S55/NHTSA 16V-529 [hereinafter “Interim Recall
Notice”]) (internal quotation marks omitted). FCA
US's Recall Notice also explained that:
FCA [US] intends to repair your vehicle free of charge (parts
and labor). However, the parts required to provide a
permanent remedy for this condition are currently not
available. FCA [US] is making every effort to obtain these
parts as quickly as possible. FCA [US] will contact you again
by mail, with a follow-up recall notice, when the remedy
parts are available.
Id. at 13 (quoting Interim Recall Notice) (emphasis
in original) (internal quotation marks omitted).
assert that FCA U.S. never intended to provide a
“permanent remedy” for the defective wire
harnesses in all 320, 000 vehicles, and knew that it had no
such intention when it issued its Recall Notice. Instead,
plaintiffs allege, defendants chose to perform a software
update that failed to cure the defect or its manifestations.
In turn, FCA U.S. amended its Part 573 Safety Recall Report
on October 6, 2016, to include the following language:
“‘FCA U.S. will reprogram the Powertrain Control
Module (“PCM”) and the Transmission Control
Module (“TCM”). In addition, if the vehicle has
an active or stored fault code, the transaxle range sensor
wire harness will be replaced.'” Id. at 63
(quoting Part 573 Report, as amended Oct. 6, 2016).
Consistent with this amended report, FCA U.S. instructed its
dealers to do the following: “‘Due to the low
expected failure rate, do not order a transaxle range sensor
wire harness until you verify the specified DTC's. A
parts ordering restriction has been assigned to help manage
harness part availability.'” Id. at 14
(quoting FCA US's Dealer Service Instructions for Safety
Recall S55/NHTSA 16V-529, 3 ...