Environmental Protection Commission of Hillsboroug v. Mercedes Benz USA, LLC

• Court: Court of Appeals for the Eleventh Circuit
• Decided: July 21, 2023
• Docket: 22-13321
• Status: Unpublished

Opinion

USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 1 of 12

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 22-13321 Non-Argument Calendar ____________________

ENVIRONMENTAL PROTECTION COMMISSION OF HILLSBOROUGH COUNTY, FLORIDA, Plaintiff-Appellant, versus MERCEDES BENZ USA, LLC, DAIMLER AKTIENGESELLSCHAFT,

Defendants-Appellees,

ROBERT BOSCH, LLC, et al., USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 2 of 12

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Defendants.

Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:20-cv-02238-VMC-MRM ____________________

Before WILSON, JORDAN, and BRANCH, Circuit Judges. PER CURIAM: This case centers around “defeat device” software that was installed in certain diesel Mercedes vehicles from 2007 to 2016, and the subsequent, post-sale updates that were made to the software. The defeat devices allowed the vehicles to bypass their emissions control systems and emit more pollutants when not in an emis- sions-testing environment. The Environmental Protection Com- mission of Hillsborough County, Florida (Hillsborough), a unit of local government, sued Mercedes Benz USA, LLC (Mercedes) and Daimler Aktiengesellschaft (Daimler) (collectively, Appellants) for violation of a local ordinance that prohibits tampering with emis- sions control systems. The district court dismissed Hillsborough’s fourth amended complaint with prejudice. After careful review, we AFFIRM. USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 3 of 12

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I. A. Procedural History Hillsborough is a unit of government responsible for pro- tecting the local environment and natural resources. On Septem- ber 24, 2020, Hillsborough initiated this action in the United States District Court for the Middle District of Florida. 1 That same day, Hillsborough filed an amended complaint to correct an error in the signature block. The next day, Hillsborough filed a second amended complaint to add information regarding the citizenship of the defendants at the district court’s request. In February 2021, the district court stayed this case pending the Supreme Court’s decision on whether to grant certiorari in a related case. The Supreme Court denied certiorari, see Volkswagen Group of America, Inc. v. The Environmental Protection Commission of Hillsborough County, Florida, 142 S. Ct. 521 (2021) (Mem.), and the district court lifted the stay in November 2021. Hillsborough moved for leave to amend its complaint to clarify that—in line with the Ninth Circuit’s ruling in In re Volkswagen “Clean Diesel” Marketing, Sales Practices, & Products Lia- bility Litigation, 959 F.3d 1201 (9th Cir. 2020)—it was only alleging violations arising from post-sale conduct. The district court granted leave to amend, and Hillsborough filed its third amended complaint on December 16, 2021. Daimler and Mercedes moved

1Hillsborough also named Robert Bosch, LLC and Robert Bosch GmbH as defendants but later voluntarily dismissed the claims against them. USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 4 of 12

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to dismiss. On April 18, 2022, the district court granted the motion to dismiss the third amended complaint. In its order, the court identified deficiencies in the tampering allegations but stated that Hillsborough might be able to cure them by “plead[ing] greater de- tail about the software updates, field fixes, and recalls on which its claims rely.” Thus, the district court stated that Hillsborough could amend its claims within fourteen days if it wished to do so. B. Motion for Extension of Time to Amend Claims On April 28, 2022, Hillsborough moved for a 90-day exten- sion of time to file its fourth amended complaint. Hillsborough requested the extension to allow time to supplement its allegations with information from outstanding records requests it had submit- ted in March 2022. Hillsborough submitted Freedom of Infor- mation Act (FOIA) and public records requests to the Environmen- tal Protection Agency (EPA) and the California Air Resources Board (CARB) seeking documents pertaining to “post-sale updates and modifications to the emission control system of the Affected Vehicles in this action, and their impact on emissions.” On May 11, 2022, the district court entered an endorsed or- der denying Hillsborough’s motion for extension of time to file a fourth amended complaint, finding that the filing of the fourth amended complaint before the court considered the motion for ex- tension of time rendered the motion for extension of time moot. The district court also found that the extension was due to be de- nied because Hillsborough failed to establish good cause to extend the amendment deadline by 90 days or more. USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 5 of 12

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C. Fourth Amended Complaint On May 2, 2022, Hillsborough filed its fourth amended com- plaint alleging two claims—one for monetary penalties and one for injunctive relief—based on the alleged violation of Chapter 1-8, “Mobile Source,” of the Rules of the Environmental Protection Commission of Hillsborough County (EPC Rules). Chapter 1-8 was promulgated to implement the Florida Legislature’s intent as declared in the Environmental Protection Act of Hillsborough County, to insure the atmospheric pu- rity and freedom of the air in Hillsborough County from contaminants or synergistic agents resulting from the improper use and combustion of fuels in motor vehicles, or any other air contaminants re- leased by the improper operation or servicing of mo- tor vehicles.

EPC Rule 1-8.01. Hillsborough further alleged that Daimler and Mercedes violated EPC Rule 1-8.05, which provides: “No person shall tamper, cause, or allow the tampering of the emission control system of any motor vehicle.” EPC Rule 1-8.05(1). The fourth amended complaint alleged that Mercedes im- plemented post-sale software updates to the vehicles’ emissions control systems. These updates were made available to Mercedes dealerships via web-based computer programs. When a vehicle was brought into a dealership for service, the dealership would in- put the vehicle identification number, which would bring up a list of any available software updates. These updates were then in- stalled during the service appointment. Further, the fourth USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 6 of 12

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amended complaint generally alleged that car manufacturers issue post-sale software updates pursuant to field fixes or recalls “via over-the-air updates, wherein vehicles receive software updates via satellite or Wi-Fi connections.” On May 16, 2022, Daimler and Mercedes moved to dismiss the fourth amended complaint. On September 20, 2022, the district court granted the motion to dismiss with prejudice, concluding that Hillsborough “has not stated plausible claims for violation of EPC Rule Chapter 1-8.” In its order, the district court noted the limited, new allegations that Hillsborough had added to the fourth amended complaint—specifically, Hillsborough added the phrase “through field fixes and recall campaigns” throughout and added allegations from two other lawsuits. But the district court found that Hillsborough still failed to allege “additional information re- garding the impact of the field fixes, recalls, or post-sale software updates on the vehicles’ emission control systems.” Thus, the dis- trict court held that Hillsborough failed to allege sufficient detail to plausibly state a claim for post-sale tampering and dismissed both claims with prejudice. Hillsborough timely appealed. II. We review de novo the district court’s dismissal of a com- plaint for failure to state a claim. Resnick v. AvMed, Inc., 693 F.3d 1317, 1324 (11th Cir. 2012). “[A] pleading must contain a ‘short and plain statement of the claim showing that the pleader is entitled to relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009) (quoting Fed. USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 7 of 12

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R. Civ. P. 8(a)(2)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint “does not need detailed factual allegations” to survive a Rule 12(b)(6) mo- tion to dismiss, but the plaintiff must allege the grounds of its enti- tlement to relief, which “requires more than labels and conclu- sions” or “a formulaic recitation of the elements of a cause of ac- tion.” Twombly, 550 U.S. at 555. We review for abuse of discretion the district court’s denial of motions for amendment and for extension of time. See In re Engle Cases, 767 F.3d 1082, 1109 (11th Cir. 2014); Lizarazo v. Miami-Dade Corr. & Rehab. Dep’t, 878 F.3d 1008, 1010–11 (11th Cir. 2017). Fed- eral Rule of Civil Procedure 15 provides that courts “should freely give leave [to amend pleadings] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “Rule 15(a)(2) ‘severely restricts’ a district court’s ability to dismiss with prejudice.” Garcia v. Chiquita Brands Int’l, Inc., 48 F.4th 1202, 1220 (11th Cir. 2022) (alteration adopted) (quot- ing Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001)). A district court must permit a plaintiff at least one opportunity to amend be- fore dismissing with prejudice if a more carefully drafted complaint might state a claim. Id. However, a district court need not grant leave to amend where: (1) there is undue delay, bad faith, dilatory motive, or repeated failure to fix deficiencies; (2) permitting amendment would cause the opposing party undue prejudice; or (3) amendment would be futile. Id. USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 8 of 12

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III. Hillsborough argues (1) that dismissal was improper be- cause the fourth amended complaint was sufficiently pleaded, and (2) that at a minimum the district court should have permitted an- other chance to amend prior to dismissal with prejudice. We ad- dress each argument in turn. A. Sufficiency of the Allegations in the Fourth Amended Complaint First, Hillsborough argues that dismissal was improper be- cause the fourth amended complaint was sufficiently pleaded un- der Federal Rule of Civil Procedure 8. We disagree. The allega- tions of the fourth amended complaint fall short of stating a plausi- ble claim for relief based on the violation of EPC Chapter 1-8. Hillsborough alleged that Appellants violated EPC Rule 1- 8.05, which provides: “No person shall tamper, cause, or allow the tampering of the emission control system of any motor vehicle.” EPC Rule 1-8.05(1). Here, the EPC Rules’ definition of “tamper- ing” is important in our analysis of whether Hillsborough plausibly alleged that Appellants violated the ordinance. The EPC Rules define “tampering” as “the intentional inac- tivation, disconnection, removal or other modification of a compo- nent or components of the emission control system resulting in it being inoperable.” EPC Rule 1-8.03(2)(h). Further, the EPC Rules define “inoperable emission control system” as “any emission con- trol system or component thereof whose operation or efficiency has been circumvented, defeated, or deleteriously affected by USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 9 of 12

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improper maintenance, improper up-keep, wear and tear, misfuel- ling, or tampering.” EPC Rule 1-8.03(2)(c). Thus, to allege a violation of the ordinance, Hillsborough needed to allege facts showing that Appellants intentionally modi- fied the vehicles’ emissions control systems in a way that rendered the systems inoperable or less efficient. Hillsborough’s allegations fall short because they do not state that the post-sale software up- dates made the emission control systems inoperable or less effi- cient. It is worth emphasizing that Hillsborough is only asserting claims relating to Appellants’ post-sale activities. This is why Hills- borough’s allegations fail. The fourth amended complaint does not allege how—through post-sale activities—Appellants modified the vehicles’ emissions control systems in such a way that rendered them inoperable or less efficient. The fourth amended complaint merely pays lip service to the post-sale software updates without alleging what effect, if any, the software updates even had on emis- sions. The closest Hillsborough gets is by alleging that “numerous post-sale software updates to the emission control systems . . . have been implemented and installed throughout the United States, Florida, and Hillsborough County through field fixes and/or recall campaigns” and that “every post-sale update that does not remove the [defeat device] workaround” is illegal. But these allegations miss the mark because, even taken as true, they do not show how the updates rendered the emissions control systems inoperable or less efficient. Thus, the fourth amended complaint does not USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 10 of 12

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contain sufficient factual matter to allege a facially plausible viola- tion of EPC Rule 1-8.05. Iqbal, 556 U.S. at 678. Hillsborough asserts that the allegations of the fourth amended complaint sufficiently put Appellants on fair notice of the claims against them. We disagree. Hillsborough’s allegations simply provide more detail about how the post-sale software up- dates occurred. The allegations do not show how Appellants, through these updates, tampered with the emissions control sys- tems in a way that violated EPC Rule 1-8. Hillsborough further argues that the fourth amended com- plaint’s reference to related litigation—specifically, a lawsuit against Mercedes brought by the EPA and CARB, and a lawsuit against Volkswagen involving similar defeat device software—sat- isfies Federal Rule of Civil Procedure 8. This argument also fails. Hillsborough simply cannot fill gaps in its allegations via reference to facts or allegations in other lawsuits. The information about the other lawsuits does not show how Appellants violated the anti- tampering ordinance in Hillsborough County. Thus, dismissal of Hillsborough’s claims with prejudice was proper because the fourth amended complaint fails to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. We affirm the district court’s dismissal with prejudice. B. Extension of Time to Amend Claims Second, Hillsborough argues the district court erred by not allowing another opportunity to amend, especially after Hills- borough demonstrated it could provide additional detail regarding USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 11 of 12

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the impact of the post-sale updates. We disagree that another chance to amend was warranted under the circumstances. Here, even disregarding Hillsborough’s first two amend- ments (which made non-substantive changes), Hillsborough still had two opportunities (in its third and fourth amended complaints) over the span of roughly six months to substantively amend its claims after the stay was lifted in November 2021. In ruling on Ap- pellants’ motion to dismiss the third amended complaint, the dis- trict court found Hillsborough’s allegations to be deficient, specifi- cally identified the type of information needed to cure the deficien- cies, and gave Hillsborough a chance to amend within fourteen days. After finding the allegations in the fourth amended com- plaint were still deficient, the district court dismissed Hills- borough’s claims with prejudice. The district court acted within its discretion in dismissing with prejudice because it had already granted Hillsborough at least one chance to amend. Garcia, 48 F.4th at 1220. Hillsborough also contends that an extension of time to file a fourth amended complaint—past the fourteen days that the dis- trict court ordered—was warranted to allow time for it to add in- formation from the FOIA and public records requests to EPA and CARB. We are unpersuaded. Hillsborough had roughly six months to seek and obtain discovery between the time the stay was lifted in November 2021 and the filing of its fourth amended com- plaint in May 2022. But Hillsborough did not submit its FOIA and public records requests until March 2022—four months after the USCA11 Case: 22-13321 Document: 36-1 Date Filed: 07/21/2023 Page: 12 of 12

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stay was lifted. We are disinclined to find that the district court abused its discretion in denying an extension of time to amend un- der these circumstances, and in all events, district courts have wide latitude in managing their dockets. Adinolfe v. United Techs. Corp., 768 F.3d 1161, 1167 (11th Cir. 2014) (“District courts have broad discretion in deciding how best to manage the cases before them.” (internal quotation marks omitted)). Thus, the district court acted within its discretion in denying Hillsborough an extension of time to amend its claims. Accord- ingly, we affirm. AFFIRMED.