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CHICAGO — A federal appeals panel has agreed car owners can’t sue Mercedes-Benz for failing to upgrade vehicles sold with outdated or quickly antiquated wireless communication technology.
Jim Rose and Anita Gian sued the automaker in Chicago. In the lawsuits, they say they bought cars equipped with Mbrace, a subscription-based system that worked on 3G wireless data networks. They said as wireless technology advanced to 4G and 5G cellular networks, Mbrace became largely obsolete, but their dealerships refused to provide no-cost upgrades.
But when Mercedes asked U.S. District Judge Mary Rowland to rule the class action breach of warranty claim was suitable for arbitration, she granted the motion and dismissed the case without prejudice.
Rose and Gian challenged that ruling before the U.S. Seventh Circuit Court of Appeals. Judge Ilana Rovner wrote the panel’s opinion, filed Feb. 13; Judges Michael Scudder and John Lee concurred.
According to Rovner, both Rose and Gian said they activated the free Mbrace subscription, then began paying the monthly fee. Verizon Telematics is the service provider and Mercedes is “expressly” listed in the Terms of Service document as a third-party beneficiary of the agreement.
“Furthermore, the agreement states (in all capital letters), ‘You will have agreed to these terms of service … by speaking with a customer service representative … and confirming that you wish to sign up for the service,’ ” Rovner wrote. “It also provides (again in all capital letters) that the parties ‘agree that, to the fullest extent provided by law … any controversy or claim arising out of or relating to … any product or service provided under or in connection with these terms of service … will be settled by independent arbitration.’ ”
Thomas Grycz, who was supervisor of product technical support for Mercedes, testified customers could only activate the subscription by enrolling at a dealership or contacting an Mbrace call center. He further said the call center’s representatives inform customers of the service terms and asks them to review the agreement document.
“Furthermore, once a car owner has activated the Mbrace subscription, Grycz states, Mercedes sends the new subscriber a Welcome Kit and a Welcome Email that reminds the subscriber that the service is subject to the agreement,” Rovner wrote. “Moreover, the email provides the subscriber with a hyperlink to a copy of the agreement. Additionally, when a subscription is about to expire, Grycz notes, Mercedes sends the subscriber a renewal email, which also references the agreement.”
Rose said he recalled subscribing through the call center the day he bought his car, but Gian thinks her's might have been active when the dealership delivered her car. However, the panel said, both plaintiffs continued past the free service by paying the fee and, although neither claims to remember being informed about the service agreement, they also didn’t dispute Grycz’s narrative about standard company policy to notify customers.
“Nothing prevented those who contacted the call center from hanging up, reviewing the agreement and recontacting the call center to subscribe,” Rovner wrote. “Rather than doing so, however, plaintiffs elected to activate their subscriptions. This evidence, in and of itself, is sufficient to establish notice that an Mbrace subscription was subject to the agreement and its terms.”
Beyond that, Rovner continued, the welcome kit and email both refer to the agreement. Although Rose and Gian argued those notices didn’t meet the bar for sufficient notice, the panel said the notice Mbrace service would be subject to those terms arrived before each driver commenced a subscription.
“Plaintiffs next contend that they have raised a genuine issue of material fact regarding whether the call center representative in fact provided them information about the agreement,” Rovner wrote. “But Grycz described in detail the protocol that call center representatives followed during the relevant period in question when they fielded inquiries from potential Mbrace subscribers. This is enough to create a rebuttable presumption that the information was provided to car owners who wanted to subscribe to the service.”
Stating only they don’t recall what Mercedes employees told them isn’t enough to defeat the presumption that Grycz’s version of events is factual, Rovner concluded. The panel affirmed Judge Rowland’s ruling.
Plaintiffs have been represented in the case by attorney David Wright and others with the McCune Law Group, of Ontario, California.
Mercedes has been represented by attorney Troy M. Yoshino, and others with the firm of Winston & Strawn, of San Francisco, Chicago and Charlotte, North Carolina.
