Class Accuses Mercedes of Parts Fraud
SAN FRANCISCO (CN) - A racketeering class action accuses Mercedes-Benz of defrauding customers by having a designated service shop install third-party parts at Mercedes prices.
Lead plaintiff Steve Ferrari claims Mercedes-Benz "directly participated in the OEM scandal" by "keeping it an internal secret" and taking no corrective action to stop co-defendants Autobahn Motors and Sonic Automotive from using after-market parts and claiming they were made by Mercedes.
OEM is auto industry jargon for original equipment manufacturer.
Ferrari and his 18 named co-plaintiffs claim Mercedes-Benz USA "directly participated in publishing an ad on its website proclaiming that its dealerships use only OEM parts and linked its website to Autobahn Motors' website, and as such co-published the fraud and fraudulent advertisement at issue in this case which includes a series of pages as to how OEM/Mercedes Benz genuine parts are superior to non genuine parts and should be used whenever a customer is making a repair of their car to increase the durability and longevity of the car, and is also a condition of a continuing warranty of the car."
Autobahn Motors operates in Los Angeles and San Mateo counties. Defendant David Ahlheim, its operations director in San Mateo County, "was the person who actually implemented, monitored, and managed, the OEM fraud scheme," according to the complaint.
Sonic Automotive, a Delaware corporation, owns more than 100 dealerships in 14 states and 25 major metropolitan markets and is a Fortune 500 company, according to its website.
Autobahn has falsely advertised since 2005 that it uses only genuine Mercedes parts, Ferrari claims. It is legal to use after-market, third-party parts to repair cars, but charging for genuine Mercedes-Benz parts, though not using them, is fraud, which Mercedes-Benz knew but concealed, Ferrari says.
He claims Autobahn runs a parts-laundering scheme in which it buys non-OEM parts from the same vendors to whom it sells genuine Mercedes-Benz parts, to conceal its use of third-party parts and paints.
And, he claims, Autobahn farms out auto body repair work to a nonparty company called Dent Wizard, but falsely claims its own auto body shop did the work.
Ferrari estimates 1,250 cars were repaired under the scheme, though Mercedes-Benz "fiercely defends its right to impose a nationwide OEM parts-only requirement on its authorized dealers" and promotes its OEM Parts-only repair policy.
He says he learned of the scheme during a third-party lawsuit against Autobahn, in which a former Autobahn technician testified in a deposition in May this year that he knowingly installed non-OEM parts on Mercedes-Benz vehicles.
Ferrari seeks class certification, disgorgement and restitution, and damages for RICO violations, fraud, misrepresentation, concealment, unfair competition, negligence, false advertising and business law violations.
He is represented by Herman Franck of Sacramento, who could not be reached for comment Thursday. Nor could officials with Mercedes-Benz, Sonic or Autobahn.