December 2020: German Automotive Antitrust Class Action MDL Knocked Out at Pleading Stage

Quinn Emanuel recently obtained dismissal with prejudice for Daimler AG and Mercedes-Benz USA, LLC in an antitrust class action in which consumers and auto dealers alleged that the five leading German car manufacturers (Audi, BMW, Daimler, Porsche, and Volkswagen) conspired to reduce innovation and fix prices.

In the summer of 2017, German magazine Der Spiegel published reports of confidential proffers to, and investigations by, the European Commission into alleged anticompetitive conduct involving technical working groups and supposed agreement between the “German Five” regarding various aspects of their vehicles. Drawing on those reports, U.S. consumers and auto dealers filed class actions throughout the country, which were eventually consolidated in the Northern District of California before Judge Breyer, who previously oversaw the VW Diesel class actions. The plaintiffs alleged that the German car manufacturers violated US federal and state antitrust laws for over two decades by using the supposed secret working groups to slow “the pace of innovation” and reduce the quality of their cars. Plaintiffs asserted that these working groups evinced a “whole car conspiracy” extending to vehicle development, suppliers, and costs, and represented that their claims involved billions of dollars in damages.

In May 2018, Quinn Emanuel and its co-defense counsel moved to dismiss the consumer and auto dealer complaints, arguing, among other things, that the plaintiffs failed to plausibly plead a whole car conspiracy, and that reports of proffers to the European Commission did not support an agreement to reduce innovation. In particular, Quinn Emanuel pointed out that the allegations, even taken at face value, did not constitute a per se violation of the antitrust laws, and that the plaintiffs’ failure to allege such a conspiracy meant that their claims failed because they did not plausibly allege a relevant market in which the defendants had or could have market power.  The court agreed. Plaintiffs amended their complaints to focus on allegations of agreements on AdBlue technical standards and steel prices. In October 2019, Quinn Emanuel and its co-defense counsel once again jointly moved to dismiss, arguing that the alleged agreement was not an unreasonable restraint on competition because the AdBlue technical standards could benefit consumers and the steel price allegations were not plausible. The court once again agreed. Finally, Plaintiffs amended their complaints a third time in an effort to resuscitate their claims, this time introducing survey and other empirical data to support their market allegations, and  asserting that the defendants fixed the price of steel for their vehicles and  passed on those costs to consumers. Following a third motion to dismiss on these issues, including Quinn Emanuel taking the lead on rebutting the new “empirical” evidence the plaintiffs alleged, the court once again dismissed the complaints, this time with prejudice.