Case 3:17-cv Document 1 Filed 08/29/17 Page 1 of 34

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1 Case :-cv-00 Document Filed 0// Page of ELIZABETH C. PRITZKER (SBN ) ecp@pritzkerlevine.com JONATHAN K. LEVINE (SBN 0) jkl@pritzkerlevine.com BETHANY CARACUZZO (SBN 0) bc@pritzkerlevine.com PRITZKER LEVINE LLP Grand Avenue, Suite 0 Oakland, CA Tel: () -0 Fax: () - Attorneys for Plaintiff Frederick C. Hawkins III FRED T. ISQUITH (pro hac forthcoming) isquith@whafh.com THOMAS H. BURT (pro hac forthcoming) burt@whafh.com MALCOLM T. BROWN (pro hac forthcoming) brown@whafh.com CORREY A. KAMIN (pro hac forthcoming) kamin@whafh.com WOLF HALDENSTEIN ADLER REEMAN & HERZ LLP 0 Madison Avenue New York, NY 0 Tel.: () - Fax: () -0 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 0 FREDERICK C. HAWKINS III, on behalf of himself and all others similarly situated, v. Plaintiff, BMW AG, BMW NORTH AMERICA, LLC, VOLKSWAGEN AG, VOLKSWAGEN GROUP OF AMERICA, INC., AUDI AG, AUDI OF AMERICA, INC., AUDI OF AMERICA, LLC, DR. ING. H.C. F. PORSCHE AG, PORSCHE CARS OF NORTH AMERICA, INC., BENTLEY MOTORS LIMITED, DAIMLER AG, MERCEDES-BENZ USA, and MERCEDES-BENZ US INTERNATIONAL, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CLASS ACTION JURY TRIAL DEMANDED

2 Case :-cv-00 Document Filed 0// Page of 0 TABLE OF CONTENTS I. NATURE OF ACTION... II. JURISDICTION AND VENUE... III. PARTIES... A. Plaintiff... B. Defendants.... The Volkswagen Defendants.... The Audi Defendants.... The Porsche Defendants.... Bentley.... Daimler.... The Mercedes Defendants.... The BMW Defendants... IV. AGENTS AND CO-CONSPIRATORS... V. FACTUAL ALLEGATIONS... A. The German Luxury Vehicle Conspiracy... B. Government Investigations into Price-Fixing In the German Luxury Vehicles Industry... VI. THE STATUTES OF LIMITATIONS DO NOT BAR PLAINTIFF S CLAIMS... A. Plaintiff Did Not and Could Not Have Discovered Defendants Anticompetitive Conduct... B. Defendants Actively Concealed the Conspiracy... 0 VII. CLASS ACTION ALLEGATIONS... VIII. ANTITRUST INJURY... IX. CLAIMS FOR RELIEF... PAGE ii

3 Case :-cv-00 Document Filed 0// Page of X. PRAYER FOR RELIEF... XI. JURY TRIAL DEMAND... 0 PAGE iii

4 Case :-cv-00 Document Filed 0// Page of 0 Frederick C. Hawkins III ( Plaintiff ), on behalf of himself and all others similarly situated, brings this class action for damages, injunctive relief, and other relief pursuant to federal and state antitrust laws, as well as unfair competition, consumer protection, and unjust enrichment laws, and alleges as follows: I. NATURE OF ACTION. This lawsuit involves a sweeping antitrust conspiracy. For at least six years and possibly longer, defendants Volkswagen AG, Volkswagen Group of America, Inc. (together, Volkswagen ), Audi AG, Audi of America Inc., Audi of America, LLC (together, Audi ), Dr. Ing. h.c.f. Porsche AG, Porsche Cars of North America, Inc. (together, Porsche ), Bentley Motors Limited ( Bentley ), Daimler AG ( Daimler ), Mercedes-Benz US International, Mercedes-Benz USA, (together, Mercedes ), BMW AG, and BMW North America, LLC (together, BMW ) (collectively, Volkswagen, Audi, Porsche, Bentley, and Mercedes will be referred to herein as Defendants ), companies who are supposed to be competing with one another, secretly colluded to benefit themselves at the expense of their customers.. Indeed, Defendants engaged in regular, frequent meetings, communications, and agreements, coordinating virtually every aspect of the manufacture and sale of vehicles they sold under the following five brand names: Mercedes-Benz, Porsche, Audi, BMW, and Bentley (the German Luxury Vehicles ). As the German publication Der Spiegel recently reported, [t]he conclusion is that Daimler, BMW, Audi, Porsche and Volkswagen often no longer compete with one another. Instead, they secretly cooperate, very closely, in fact, in the same way one would normally expect of the subsidiaries of a single company to work together, as something like a Defendant Daimler owns the Mercedes-Benz brand. Volkswagen owns the Audi, Porsche and Bentley brands.

5 Case :-cv-00 Document Filed 0// Page of 0 German Cars Inc. -- or a cartel.. The conspiracy at issue is both long-running and vast. Volkswagen admitted to authorities that, in the last five years alone, Defendants met and conspired through at least 0 working groups and,000 meetings involving more than 00 employees.. In a document dated July, 0 and submitted to the European Commission ( EC ), Volkswagen reportedly declared its participation in suspected cartel infringements. According to this document, Volkswagen stated that Daimler, BMW, Volkswagen, Audi, and Porsche have coordinated matters relating to the development of their vehicles, costs, suppliers and markets for many years -- at least since the 0s and to this day. Further, in its July 0 submission, Volkswagen stated this behavior was likely in violation of cartel law. Volkswagen has reported the same information to the German Federal Cartel Office (the Bundeskartellamt or FCO ).. Volkswagen and Daimler have also reportedly admitted to participating in the unlawful cartel and applied for leniency from the EC in exchange for their cooperation in the probe. The EC has launched an investigation of the Defendants concerning potential anticompetitive activities.. Commentators believe that this conspiracy is likely one of the biggest cartel cases in German industrial history. The conspiracy was so extensive (in both duration and scope) because German industry executives long viewed violations of competition law as harmless rule violations, on a par with parking tickets.. As a result of Defendants overarching conspiracy, Plaintiff and the other members Frank Dohmen and Dietmar Hawranek, The Cartel: Collusion Between Germany s Biggest Carmakers, Der Spiegel (July, 0), available at germany/the-cartel-collusion-between-germany-s-biggest-carmakers-a-.html. Id. Id. PAGE

6 Case :-cv-00 Document Filed 0// Page of 0 of the Classes (as defined herein) paid for German Luxury Vehicles at unlawfully inflated prices. Moreover, because Defendants collaborated so closely to ensure that they all introduced innovative features in lockstep with one another, Plaintiff and the other members of the Classes (as defined herein) paid for German Luxury Vehicles with inferior feature sets without receiving any corresponding discount in price.. The business activities of the Defendants substantially affected interstate trade and commerce in the United States and caused antitrust injury to Plaintiff and members of the Classes (as defined herein) in the United States.. The earliest reported meeting among members of the cartel of German Luxury Vehicle manufacturers took place in April 00, when a working group of Defendants chassis managers met in Sindelfingen, Germany to discuss the perceived urgent need for a coordinated approach with respect to the emissions control technology used by the manufacturers in their diesel vehicles. On information and belief, based upon the length of an average vehicle production cycle, Germany Luxury Vehicles affected by Defendants April 00 collusion would have been available for purchase by consumers in the United States in or around January 00.. As such, Plaintiff seeks to represent all persons and entities who, from at least as early as January, 00 through such time as the anticompetitive effects of the Defendants conduct ceased (the Class Period ), purchased or leased one or more new German Luxury Vehicles in the United States. II. JURISDICTION AND VENUE. Plaintiff brings this class action on behalf of the Classes defined herein to recover actual and/or compensatory damages, double and treble damages as permitted, pre- and post- PAGE

7 Case :-cv-00 Document Filed 0// Page of 0 judgment interest, costs, and attorneys fees for the injury caused by Defendants conduct alleged in this Complaint. Plaintiff brings this action under, inter alia, Section of the Clayton Act ( U.S.C. ) to secure injunctive relief against Defendants for violating Section of the Sherman Act ( U.S.C. ). This Court has subject matter jurisdiction under U.S.C.,, and Sections and of the Clayton Act, U.S.C. (a) and.. Plaintiff also asserts claims for actual and exemplary damages and injunctive relief pursuant to state antitrust, unfair competition, and consumer protection laws, and seeks to obtain restitution, recover damages, and secure other relief against Defendants for violation of those state laws. Plaintiff and the Classes (as defined herein) also seek attorneys fees, costs, and other expenses under federal and state laws. This Court has jurisdiction over the subject matter of this action pursuant to U.S.C. (d), as amended by the Class Action Fairness Act of 00, in that this is a class action in which the matter in controversy exceeds the sum of $,000,000, exclusive of interest and costs, and in which some members of the proposed Classes (as defined herein) are citizens of a state different from some Defendants. This Court has supplemental jurisdiction over Plaintiff s state law claims, pursuant to U.S.C., in that these claims form part of the same case or controversy as Plaintiff s federal claims, under Article III of the United States Constitution.. Venue is proper in this District pursuant to Section of the Clayton Act ( U.S.C. ), and U.S.C. (b), (c), and (d), because a substantial part of the events giving rise to Plaintiff s claims occurred in this District, a substantial portion of the affected interstate trade and commerce discussed below has been carried out in this District, and one or more of the Defendants reside, are licensed to do business in, are doing business in, have agents in, or are found or transact business in this District.. This Court has in personam jurisdiction over the Defendants because each, either PAGE

8 Case :-cv-00 Document Filed 0// Page of 0 directly or through the ownership and/or control of its subsidiaries, inter alia: (a) transacted business in the United States, including in this District; (b) directly or indirectly sold or marketed substantial quantities of German Luxury Vehicles in the United States, including in this District; (c) had substantial aggregate contacts with the United States, including in this District; or (d) was engaged in an illegal conspiracy in restraint of trade that was directed at, and had a direct, substantial, reasonably foreseeable and intended effect of causing injury to the business or property of persons and entities residing in, located in, or doing business throughout the United States, including in this District. Defendants also conduct business throughout the United States including in this District, and have purposefully availed themselves of the laws of the United States.. Defendants engaged in conduct both inside and outside of the United States that caused direct, substantial and reasonably foreseeable and intended anticompetitive effects upon interstate commerce within the United States.. The activities of Defendants and their co-conspirators were within the flow of, were intended to, and did have, a substantial effect on interstate commerce within the United States. Defendants products are sold in the flow of interstate commerce.. German Luxury Vehicles manufactured abroad by Defendants and sold in the United States are goods brought into the United States for sale, and therefore constitute import commerce. The anticompetitive conduct, and its effect on United States commerce, as described herein, proximately caused antitrust injury in the United States.. Defendants unlawful activities substantially affected commerce throughout the United States, causing injury to Plaintiff and members of the Classes (as defined herein). Defendants, directly and through their agents, engaged in anticompetitive activities affecting all states, as they coordinated activities related to the development of Defendants vehicles, costs, suppliers and PAGE

9 Case :-cv-00 Document Filed 0// Page of 0 markets.. Defendants conspiracy and anticompetitive conduct, as described herein, caused persons in the United States who purchased or leased one or more new German Luxury Vehicles to pay unlawfully inflated prices. III. PARTIES A. Plaintiff 0. Plaintiff Frederick C. Hawkins III is a resident of Villanova, Pennsylvania who leased a new 00 Mercedes-Benz ML0 in Wisconsin. In 0, Mr. Hawkins bought out the lease on his German Luxury Vehicle. B. Defendants. This Complaint refers from time to time to a corporate family or companies by a single name. In these instances, Plaintiff alleges that one or more employees or agents of entities within that corporate family engaged in conspiratorial acts on behalf of every company in that family. The individual participants in the conspiratorial acts did not always know the corporate affiliation of their counterparts, nor did they distinguish between the entities within a corporate family. The individual participants entered into agreements on behalf of their respective corporate families. As a result, those agents represented the entire corporate family with respect to such conduct, and the corporate family was party to the agreements that those agents reached.. The Volkswagen Defendants. Defendant Volkswagen AG is a German corporation with its principal place of business in Wolfsburg, Germany. Volkswagen AG is the parent company of Volkswagen Group of America, Inc., Audi AG, Porsche AG, and Bentley. Volkswagen AG has designed, developed, manufactured, and sold the German Luxury Vehicles at issue, which were purchased throughout the United States, including in this District, at all times during the Class Period. In 0, Volkswagen PAGE

10 Case :-cv-00 Document Filed 0// Page of 0 AG was the largest auto manufacturer in the world. Volkswagen AG s sales revenue for 0 was over billion dollars, with sales revenue in North America of approximately. billion.. Defendant Volkswagen Group of America, Inc. is incorporated in New Jersey, and does business in all fifty states and the District of Columbia, with its principal place of business in Herndon, Virginia. Volkswagen Group of America, Inc. has advertised, marketed, and sold Volkswagen vehicles through the United States, including in this District, at all times during the Class Period.. The Audi Defendants. Defendant Audi AG is a German corporation with its principal place of business in Ingolstadt, Germany. Audi AG is the parent company of Audi of America, Inc. and Audi of America, LLC and also is a wholly-owned subsidiary of Volkswagen AG. Audi AG has designed, developed, manufactured, and sold the German Luxury Vehicles at issue, which were purchased throughout the United States, including in this District, at all times during the Class Period. Audi AG directs the activities of its subsidiaries, which act as its agents selling German Luxury Vehicles throughout the United States.. Defendant Audi of America, Inc. is incorporated in New Jersey, and does business in all fifty states and the District of Columbia, with its principal place of business in Herndon, Virginia.. Defendant Audi of America, LLC is incorporated in Delaware, and does business in all fifty states and the District of Columbia, with its principal place of business in Herndon, Virginia.. The Porsche Defendants. Defendant Dr. Ing. h.c. F. Porsche AG is a German corporation with its principal place of business located in Stuttgart, Germany. Porsche AG is a wholly-owned subsidiary of PAGE

11 Case :-cv-00 Document Filed 0// Page of 0 Volkswagen AG. Porsche AG has designed, developed, manufactured, and sold the German Luxury Vehicles at issue, which were purchased throughout the United States, including in this District, at all times during the Class Period.. Defendant Porsche Cars North America, Inc. is incorporated in Delaware with its principal place of business in Georgia. Porsche Cars North America, Inc. is a wholly-owned U.S. subsidiary of Porsche AG and advertises, markets, and sells German Luxury Vehicles in all fifty states. Porsche Cars North America, Inc. maintains a network of dealers throughout the United States.. Bentley. Bentley Motors Limited Company is organized under the laws of the United Kingdom. Bentley has been a subsidiary of Volkswagen AG since. In 0, Bentley moved its U.S. headquarters to the offices of Volkswagen Group of America in Herndon, Virginia. Prior to this change, Bentley was headquartered in Boston, Massachusetts.. Daimler 0. Defendant Daimler AG is a foreign corporation headquartered in Stuttgart, Baden- Württemberg, Germany. Daimler has designed, engineered, manufactured, tested, marketed, supplied, sold, and distributed the German Luxury Vehicles at issue, which were purchased throughout the United States, including in this District, at all times during the Class Period. Daimler is the parent company of Mercedes-Benz USA, LLC and controls this subsidiary, which acts as the sole distributor for Mercedes-Benz vehicles in the United States. Daimler owns 0% of the capital share in Mercedes-Benz USA, LLC. In 0, Daimler had global revenues of. billion, with approximately billion of revenues derived from Mercedes-Benz premium vehicles. Daimler s 0 revenue derived from U.S. sales totaled approximately. billion.. The Mercedes Defendants PAGE

12 Case :-cv-00 Document Filed 0// Page of 0. Defendant Mercedes-Benz USA, LLC is a Delaware limited liability corporation with its principal place of business in Atlanta, Georgia. Mercedes-Benz USA, LLC operates a regional sales office, a parts distribution center, and a customer service center in New Jersey. Mercedes has designed, manufactured, marketed, distributed, and sold the German Luxury Vehicles at issue, which were purchased throughout the United States, including in this District, at all times during the Class Period.. Defendant Mercedes-Benz U.S. International, Inc. is a corporation organized and existing under the laws of Alabama, with its principal place of business in Vance, Alabama. Mercedes-Benz U.S. International, Inc. is a wholly-owned subsidiary of Daimler AG.. The BMW Defendants. Defendant BMW AG is a German holding company and vehicle manufacturer. BMW is headquartered in Germany. BMW, together with its subsidiaries, has developed, manufactured, and sold cars and motorcycles worldwide, including the German Luxury Vehicles at issue, which were purchased throughout the United States, including in this District, at all times during the Class Period. In 0, BMW had global revenues of approximately. billion, with billion derived from its sale of automobiles. The United States was responsible for approximately billion of BMW s. billion in revenues in 0.. Defendant BMW North America, LLC is a Delaware limited liability corporation with its principal place of business in Woodcliff Lake, New Jersey. BMW North America is the United States importer of BMW vehicles. IV. AGENTS AND CO-CONSPIRATORS Prior to July 0, Mercedes-Benz USA, LLC s principal place of businesses was Montvale, New Jersey. PAGE

13 Case :-cv-00 Document Filed 0// Page of 0. Each Defendant acted as the principal of or agent for the other Defendants with respect to the acts, violations, and common course of conduct alleged herein.. Robert Bosch GmbH ( Bosch ) is a German multinational engineering and electronics company headquartered in Gerlingen, Germany. Bosch, directly and/or through its North American subsidiary, Robert Bosch LLC, designs, manufacturers, develops, and supplies automotive technology.. Robert Bosch LLC ( Bosch USA ) is a Delaware limited liability company with its principal place of business in Farmington Hills, Michigan. Bosch USA is wholly-owned and controlled by Bosch. Bosch USA worked in conjunction with its parent company, Bosch, to design, manufacture, develop, and supply automotive technology to the Defendants for use in the German Luxury Vehicles.. The New York Times has reported that, according to the online edition of German magazine Der Spiegel, German cartel authorities received documents from Volkswagen, citing examples of possible collusion between Germany s top carmakers and auto supplier Bosch.. Various other persons partnerships, sole proprietors, firms, corporations, and individuals not named as defendants in this lawsuit, as well as individuals, the identities of whom are not presently known, have participated as co-conspirators with the Defendants in the offenses alleged in this Complaint, and have performed acts and made statements in furtherance of the conspiracy or in furtherance of the anti-competitive conduct. 0. Whenever in this Complaint reference is made to any act, deed, or transaction of any corporation or limited liability entity, the allegation means that the corporation or limited Reuters, German Cartel Authorities Receive More Documents From VW-Der Spiegel, N.Y. Times (July, 0), available at reuters-germany-emissions-cartel.html. PAGE

14 Case :-cv-00 Document Filed 0// Page of 0 liability engaged in the act, deed, or transaction by or through its officers, directors, agents, employees, or representatives while they were actively engaged in the management, direction, control, or transaction of the corporation s or limited liability entity s business or affairs. V. FACTUAL ALLEGATIONS A. The German Luxury Vehicle Conspiracy. For many years and possibly decades, Defendants have shared commerciallysensitive information and reached unlawful agreements regarding German Luxury Vehicle technology, including information related to costs, suppliers, market, emissions equipment and other competitive attributes.. This conspiracy has prompted competition authorities from multiple jurisdictions, including the United States, to open investigations into Defendants unlawful conduct.. In the last five years alone, Defendants shared competitively-sensitive information through 0 working groups and over,000 meetings. These contacts involved at least 00 employees. The employees who participated in these meetings were assigned to working groups and sub-working groups, classified according to at least the following development areas: engine, car body, chassis, electric/electronic and total vehicle. Because representatives from five auto brands were involved, the groups were known internally as the groups of five. Some commentators have noted that, [s]ometimes the cooperation among Daimler, BMW, Audi, Porsche and Volkswagen worked more effectively than cooperation among various departments within a company. Frank Dohmen and Dietmar Hawranek, The Cartel: Collusion Between Germany s Biggest Carmakers, Der Spiegel (July, 0), available at germany/the-cartel-collusion-between-germany-s-biggest-carmakers-a-.html. Id. PAGE

15 Case :-cv-00 Document Filed 0// Page of 0. As Volkswagen noted in its July 0 submission to the cartel authorities, there was an exchange of internal, competitively sensitive technical data among the Defendants. Further, Volkswagen stated that the Defendants had jointly established technical standards and had agreed to use only certain technical solutions in new vehicles. This agreement to move in lockstep with regard to technical development and innovation prevented purchasers and lessees of German Luxury Vehicles from benefiting from improved feature sets that a typical competitive marketplace would have provided.. For example, one area in which the Defendants engaged in extensive cooperation was with respect to their respective convertible models. Representatives of Defendants, who were part of a working group for mechanical attachments, engaged in numerous meetings to determine the maximum speed at which a driver could open or close the top. According to written minutes of one of the meetings, which took place in Bad Kissingen, Germany, the Defendants agreed that there would be [n]o arms race when it comes to speeds. The minutes of the meeting related that arguments against an arms race, were costs, weight, increasing technological risk and crash relevance.. The result of that meeting is that the soft tops on the convertibles sold by Daimler, BMW, Audi, Porsche, and Volkswagen can only be opened and closed at speeds of up to 0 kilometers per hour. Not only did this force consumers to pay higher prices for stunted technology, but also, by limiting innovation, it foreclosed access to potentially superior convertible tops. Thus, consumers paid more for less innovative vehicles.. Another significant aspect of Defendants overarching conspiracy in the German Luxury Vehicles market was Defendants coordination with regard to the emissions control technology used in their diesel vehicles. PAGE

16 Case :-cv-00 Document Filed 0// Page of 0. As calls for limits on CO emissions became more and more vocal worldwide, Defendants began facing a substantial threat from one of their Japanese competitors, Toyota.. Toyota responded to criticism of the automobile industry by selling vehicles with hybrid drives, in which a classic combustion engine is supported by an electric motor. This pioneering technology drastically reduced fuel consumption and, as a result, also reduced CO emissions. 0. The German auto industry had nothing comparable to offer, until it turned its attention to the diesel engine.. While diesel engines are more efficient and therefore produce less CO than gasoline engines they also produce nitric oxides ( NOx ), which contribute to air pollution and have been shown to lead to serious health problems and even death. This toxic gas, however, can be reduced by injecting a chemical compound called urea (known by the trade name AdBlue ) into the vehicles exhaust systems.. AdBlue is a liquid that is used with a Selective Catalytic Reduction ( SCR ) system to clean the emissions disseminated from diesel vehicles. AdBlue is also called Diesel Exhaust Fluid ( DEF ). DEF is.% urea and.% deionized water and, together with the SCR system, is necessary for diesel vehicles to be emissions-compliant.. This solution to the NOx problem, however, created another complication AdBlue needs a tank and, the bigger the tank, the more money it costs.. On April, 00, a working group of Defendants chassis managers met in The German Association of the Automotive Industry ( Verband der Automobilindustrie or VDA ) registered the name AdBlue to cover the worldwide distribution of the synthetic chemical product urea AUS for use in all relevant motor vehicle markets. See AdBlue, Verband der Automobilindustrie (last visited Aug., 0), available at PAGE

17 Case :-cv-00 Document Filed 0// Page of 0 Sindelfingen to address this issue, concluding that the companies urgently needed a coordinated approach on tank sizes.. According to the minutes of this meeting, agreement by all members of Defendants cabal to use a moderately-sized tank could save each manufacturer of German Luxury Vehicles up to 0 EUR [$] per vehicle. As indicated by a Volkswagen , the heads of development agreed that AdBlue tanks for Europe would be developed with a target size of to liters. If possible, the tanks were to be produced by only two manufacturers and designed so that customers would not have to refill them.. In October 00, the development heads of the German Luxury Vehicle manufacturers met again to discuss the same issue. In advance of this meeting, Audi had prepared an overview of all tank sizes being used by members of the cartel. This report showed that, in 00, Daimler, Audi, Volkswagen, and BMW had installed tanks with volume ranging between and liters.. Those present at the meeting agreed that there was an urgent need for cooperation among the companies and that [a] uniform escalation logic should be agreed to. To ensure that the manufacturers would move in lockstep on tank sizes from that point on, the individuals responsible for the next steps were explicitly named: first, the drive managers and, second, the chassis managers. Where competition would have forced the German Luxury Vehicle manufacturers to develop the best technology available, this agreement to move in lockstep with relation to emissions control technology ensured that consumers were offered subpar feature sets.. Finally, in September 00 after several meetings Defendants all agreed to use small eight-liter AdBlue tanks to reduce costs. The only problem was that, if NOx is properly neutralized, an eight-liter tank would not last for more than,00 miles. PAGE

18 Case :-cv-00 Document Filed 0// Page of 0. According to a document prepared by Audi, at average AdBlue consumption levels, a minimum tank volume of liters particularly to satisfy U.S. emissions control requirements. Daimler, Volkswagen, and BMW reportedly concurred with Audi s assessment. 0. As U.S. regulators seemed unwilling to accept the possibility that AdBlue tanks would need to be refilled between inspection dates, the departments in charge of vehicle licensing for Defendants expressed doubts about the eight-liter tanks. The companies marketing departments, however, felt that tanks with sufficient volume to satisfy U.S. emissions control requirements were too heavy and too large.. At this point, as Volkswagen informed the EC in its recent brief, top management became involved. In fact, [a]n internal Audi presentation resulted in a commitment by German automobile manufacturers at the executive level.. With disputes raging among the various departments at each company, as well as in the clandestine meetings of the so-called groups of five, Audi managers reiterated that [t]hese conflicting goals needed to be resolved across the board in order to satisfy the urgent need for a coordinated scenario for the future.. Eventually, the companies marketing and sales departments prevailed; in June 0, the companies unlawfully agreed to introduce smaller tanks. While the eight-liter size was to remain the standard in Europe, -liter tanks were planned for the U.S. market.. Defendants reached this agreement knowing that a -liter AdBlue tank was insufficient to meet rising U.S. emissions standards. Indeed, Defendant Audi wrote in an that a minimum tank volume of liters was needed based on average AdBlue consumption to comply with U.S. requirements.. Even in Europe, the introduction of stricter environmental regulations meant that the PAGE

19 Case :-cv-00 Document Filed 0// Page of 0 amount of AdBlue required to comply with legal limits was increasing. In fact, according to the relevant strategy group, the planned introduction of Euronorm emissions standards would lead to an increase in AdBlue consumption of up to 0 percent. This meant that the tanks being used by Defendants were far too small.. Instead of taking the obvious route and installing larger tanks thereby obtaining a competitive advantage and selling cleaner cars each member of the cartel continued to ensure that it moved in lockstep with its co-conspirators. Der Spiegel has reported that the Defendants continued to find it absolutely necessary to have a coordinated approach with respect to tank sizes. As such, while Defendants reduced their own costs, they did so at the expense of innovation. Even as the prices of the German Luxury Vehicles rose, the structure of strictly coordinated innovation developed by the Defendants all but ensured that quality remained stagnant.. Defendant Volkswagen in particular was insistent that the agreements on AdBlue tank size were necessary to ensure that U.S. emissions regulators did not scrutinize its emissions control systems. Volkswagen knew that it would be able to pass U.S. emissions tests with -liter tanks because it had designed a work-around, known as a defeat device, which enabled its vehicles to pass emissions testing without adequately-sized AdBlue tanks. Nevertheless, Volkswagen feared that different sized AdBlue tanks being utilized by various manufacturers of German Luxury Vehicles would cause U.S. emissions regulators to question how some companies were getting away with less AdBlue while others needed substantially more solution to clean their emissions.. In a May 0 , Defendant Audi urgently warned against any company going it alone, noting that varying tank sizes could lead licensing and regulatory authorities to become suspicious, with upgrades to any AdBlue systems ultimately expand[ing] into an arms race with regard to tank sizes, which we should continue to avoid at all costs. PAGE

20 Case :-cv-00 Document Filed 0// Page 0 of 0. The illegality of these discussions was considered at a meeting of one of the working groups in Bayreuth, Germany reportedly in response to the rejection of inquiries from other vehicle manufacturers interested in joining the cabal. Documents available date this meeting to September, of an unspecified year. According to a memo summarizing the meeting, the BMW representative asked: [w]ho would be interested in proving that we are in violation of cartel law? The Daimler representative responded: [m]ainly the exchange supervisory authority. He added that Daimler had also engaged outside auditors who have access to everything. Another participant said: Our agreement that a sensor needs to be developed is not the critical issue, but the joint definition of the supplier is. 0. In particular, the Defendants acknowledged internally that their discussions concerning their respective emissions control technology likely were in violation of the antitrust laws. The lack of competition among Defendants caused both artificially inflated prices and deliberate refusal to innovate. In an written by a Volkswagen manager, for example, he noted that Daimler had its legal advisers examine the issue and [t]he law firm that was hired expressed considerable concerns that problems could arise if a competitor did in fact file a complaint. Defendants managers who participated in these meetings repeatedly recognized that their agreements could be illegal. In fact, one of the working groups involved in the discussions regarding emissions controls removed the last two pages of a September 0 presentation, which related to the development of a special sensor, because an from a Daimler employee stated, [a] review of the document with the legal department led to serious concerns in terms of cartel law.. Defendants discussions and agreements regarding AdBlue and emissions control technology, however, were but a small part of the Defendants conspiracy. The Defendants reached agreements with respect to virtually every aspect of their respective vehicles including, but not PAGE

21 Case :-cv-00 Document Filed 0// Page of limited to, brake systems, seating systems, chassis, and suspension systems.. Given the large number of working groups, even seemingly small details were agreed to among the members of the syndicate. In a meeting in Munich, for example, members of the clutch working group discussed when the parking lock should be activated in a vehicle.. The Defendants collusion was especially problematic when the group of five exchanged information about major suppliers. Beginning on September, 0, members of the pneumatic suspension working group purportedly met with representatives of the German Luxury Vehicle manufacturers to discuss supplier performance. Any agreement among Defendants to use or avoid a particular supplier would likely have a marked effect on the industry, not to mention violating cartel laws. 0 B. Government Investigations into Price-Fixing in the German Luxury Vehicles Industry. On June, 0, in connection with investigations against a steel cartel, the German Federal Cartel Office conducted searches at six companies, seizing computers, hard drives, and files. The evidence seized during these searches contained something the investigators called bycatch evidence of violations in a completely different case.. After years perhaps decades of furtive collaboration, the cabal of German Luxury Vehicle manufacturers was finally exposed.. On July, 0, the European Commission announced that it was investigating allegations of an antitrust cartel among a group of major German Luxury Vehicle manufacturers including Defendants Volkswagen, Audi, Porsche, Daimler, Mercedes-Benz, and BMW, as well as certain of their subsidiaries. The EC issued a statement stating, [t]he European Commission and the Bundeskartellamt have received information on this matter, which is currently being assessed PAGE

22 Case :-cv-00 Document Filed 0// Page of 0 by the Commission.. Both the European Commission and its German counterpart, the FCO, have confirmed that they received information from certain Defendants that may relate to the operation of an antitrust cartel dating back more than a decade.. As part of its investigation, the European Commission has already confiscated documents from Defendants and interviewed witnesses in connection with the alleged cartel.. According to Volkswagen s admissions to German antitrust officials, Defendants entered into potentially unlawful agreements regarding vehicle development, brakes, petrol and diesel engines, clutches and transmissions as well as exhaust treatment systems. 0. According to reports, Volkswagen and Daimler have both come forward to European regulators admitting participation in an antitrust conspiracy in exchange for leniency. Daimler has reportedly obtained leniency while Volkswagen may be eligible for a reduction in fines in exchange for its cooperation.. The United States Department of Justice s Antitrust Division announced on July, 0 that it is also investigating the matter. VI. THE STATUTES OF LIMITATIONS DO NOT BAR PLAINTIFF S CLAIMS A. Plaintiff Did Not and Could Not Have Discovered Defendants Anticompetitive Conduct. Plaintiff and the members of the Classes (as defined herein) had neither actual nor constructive knowledge of the facts constituting their claims for relief. Plaintiff and members of the Foo Yun Chee, EU antitrust regulators say probing possible German car cartel, Reuters (July, 0), available at Sara Forden and Tom Schoenberg, U.S. Is Said to Review Allegations German Carmakers Colluded, Bloomberg (July, 0), available at articles/0-0-/u-s-is-said-to-review-allegations-german-carmakers-colluded. PAGE

23 Case :-cv-00 Document Filed 0// Page of 0 Class did not discover, and could not have discovered through the exercise of reasonable diligence, the existence of the conspiracy alleged herein until July, 0, when the German publication Der Spiegel reported that Volkswagen disclosed participation in antitrust violations resulting from coordination with German Luxury Vehicle manufacturers about the development of their vehicles, costs, suppliers and strategies for controlling emissions in diesel engines for at least the past decade.. Defendants anticompetitive conspiracy, by its very nature, was self-concealing. Plaintiff reasonably considered the German Luxury Vehicle industry to be a competitive industry. Accordingly, a reasonable person under the circumstances would not have been alerted to begin investigating the legitimacy of Defendants German Luxury Vehicle prices before July, 0.. Plaintiff exercised reasonable diligence. Plaintiff and the members of the Classes (as defined herein) could not have discovered the alleged conspiracy before July, 0 by the exercise of reasonable diligence because of the deceptive practices and techniques of secrecy employed by Defendants and all of their co-conspirators to conceal their combination. B. Defendants Actively Concealed the Conspiracy. Throughout the Class Period set forth in this Complaint, Defendants and their coconspirators effectively, affirmatively, and fraudulently concealed their unlawful combination and conspiracy from Plaintiff and the Class members.. The combination and conspiracy alleged herein was fraudulently concealed by Defendants by various means and methods including, but not limited to, secret meetings, surreptitious communications between Defendants by the use of the telephone, or in-person meetings at trade association meetings (and elsewhere). Throughout the course of the conspiracy, the Defendants secretly met at least,000 times to communicate, and ultimately coordinate, about various facets of the German Luxury Vehicle industry, including technology, costs, suppliers, PAGE 0

24 Case :-cv-00 Document Filed 0// Page of 0 markets, and emissions equipment. The Defendants surreptitious meetings successfully concealed the lengthy conspiracy as reflected by the fact that although it began at least a decade ago it did not become public until July, 0.. During the relevant period, Defendants affirmatively made numerous misleading public statements falsely portraying the market for German Luxury Vehicles as a competitive one. For example, in Volkswagen s 0 Annual Report, Volkswagen falsely described competition between it and other German Luxury Vehicle manufacturers as fierce.. Further, throughout the Class Period, Defendants misleadingly and falsely touted their commitment to compliance with the antitrust laws or competition laws. For example, in Daimler s 0 Annual Report, Daimler stated: Our Group-wide antitrust compliance program is oriented to national and international standards. The program establishes a binding, globally valid Daimler standard that defines how matters of competition law are to be assessed. The Daimler standard is based on the strict standards of the European antitrust authorities and courts. Its existence ensures a uniform level of compliance and advice in all countries.. By virtue of the fraudulent concealment of their wrongful conduct by Defendants and all of their co-conspirators, the running of any statute of limitations has been tolled and suspended with respect to any claims and rights of action that Plaintiff and the other Class members have as a result of the unlawful combination and conspiracy alleged in this Complaint. VII. CLASS ACTION ALLEGATIONS 0. Plaintiff brings this action on behalf of himself, and as a class action under Federal Rules of Civil Procedure (a), (b)() and (b)(), seeking injunctive relief pursuant to federal law, and damages pursuant to state antitrust, unfair competition, unjust enrichment, and consumer protection laws on behalf of the members of the following classes (referred to herein as the Classes or, collectively, as the Class ): PAGE

25 Case :-cv-00 Document Filed 0// Page of 0 A. Nationwide Injunctive Relief Class: All persons and entities who indirectly purchased one or more new German Luxury Vehicles from Defendants or coconspirators for personal use in the United States during the Class Period. B. Wisconsin Class: All persons and entities who indirectly purchased one or more new German Luxury Vehicles from Defendants or co-conspirators for personal use in Wisconsin during the Class Period.. The classes set forth above are collectively referred to herein as the Classes (or, collectively, the Class ) unless otherwise indicated. Specifically excluded from these Classes are the Defendants; the officers, directors or employees of any Defendant; any entity in which any Defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any Defendant. Also excluded from these Classes are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, any juror assigned to this action, and any co-conspirator identified in this action.. Class Identity: The above-defined Classes are readily identifiable and are ones for which records should exist.. Numerosity: Plaintiff does not know the exact number of Class members because such information presently is in the exclusive control of Defendants or other third parties, such as the dealers of Defendants vehicles. Plaintiff believes that, due to the nature of the trade and commerce involved, there are tens of thousands of Class members geographically dispersed throughout the United States, such that joinder of all Class members is impracticable.. Typicality: Plaintiff s claims are typical of the claims of the members of the Classes because Plaintiff purchased a German Luxury Vehicle indirectly from one or more of the Defendants for personal use, and therefore Plaintiff s claims arise from the same common course of conduct giving rise to the claims of the Classes and the relief sought is common to the Classes.. Common Questions Predominate: There are questions of law and fact common to the Classes, including, but not limited to: PAGE

26 Case :-cv-00 Document Filed 0// Page of 0 A. Whether Defendants and their co-conspirators engaged in an agreement, combination, or conspiracy to fix, raise, elevate, maintain, or stabilize prices of German Luxury Vehicles sold in interstate commerce in the United States; B. The identity of the participants of the alleged conspiracy; C. The duration of the conspiracy alleged herein and the acts performed by Defendants and their co-conspirators in furtherance of the conspiracy; D. Whether the alleged conspiracy violated the antitrust and consumer protection laws of the various states; E. Whether the conduct of Defendants and their co-conspirators, as alleged in this Complaint, caused injury to the business or property of the Plaintiff and the other members of the Classes; F. The effect of Defendants alleged conspiracy on the prices of German Luxury Vehicles sold in the United States during the Class Period; G. Whether Plaintiff and other members of the Classes are entitled to, among other things, injunctive relief and, if so, the nature and extent of such injunctive relief; and H. The appropriate Class-wide measure of damages. These and other questions of law or fact, which are common to the members of the Classes, predominate over any questions affecting only individual members of the Classes.. Adequacy: Plaintiff will fairly and adequately protect the interests of the Classes in that Plaintiff s interests are aligned with, and not antagonistic to, those of the other members of the Classes who indirectly purchased one or more new German Luxury Vehicles from Defendants. Plaintiff has retained counsel competent and experienced in the prosecution of class actions and antitrust litigation to represent himself and the Classes.. Superiority: A class action is superior to other available methods for the fair and efficient adjudication of this controversy since individual joinder of all damaged members of the Classes is impractical. Prosecution as a class action will eliminate the possibility of duplicative litigation. The relatively small damages suffered by individual members of the Classes compared to the expense and burden of individual prosecution of the claims asserted in this litigation means that, PAGE

27 Case :-cv-00 Document Filed 0// Page of 0 absent a class action, it would not be feasible for members of the Classes to seek redress for the violations of law alleged herein. Further, individual litigation presents the potential for inconsistent or contradictory judgments and would greatly magnify the delay and expense to all parties and to the court system. Therefore, a class action presents far fewer case management difficulties and will provide the benefits of unitary adjudication, economy of scale, and comprehensive supervision by a single court.. The prosecution of separate actions by individual members of the Classes would create the risk of inconsistent or varying adjudications, establishing incompatible standards of conduct for Defendants.. Plaintiff brings the Classes, pursuant to Rule, on behalf of all persons and entities that indirectly purchased one or more new German Luxury Vehicles for personal use during the Class Period. 0. Defendants have acted on grounds generally applicable to the Classes, thereby making final injunctive relief appropriate with respect to the Classes as a whole. VIII. ANTITRUST INJURY. Defendants anticompetitive conduct had the following effects, among others: A. Price competition has been restrained or eliminated with respect to German Luxury Vehicles; B. The prices of German Luxury Vehicles have been fixed, raised, stabilized, or maintained at artificially inflated levels; C. Indirect purchasers of German Luxury Vehicles have been deprived of free and open competition; and D. End-user consumers of German Luxury Vehicles who indirectly purchased German Luxury Vehicles for personal use, including Plaintiff, paid artificially inflated prices.. The German Luxury Vehicles that Plaintiff and Class members purchased were in PAGE

28 Case :-cv-00 Document Filed 0// Page of 0 substantially the same form as when they were initially sold by Defendants. As a result, the German Luxury Vehicles follow a traceable physical chain from Defendants to the Plaintiff and other Class members, and the overcharges on German Luxury Vehicles can be traced from Defendants to Plaintiff and other Class members.. As a matter of economic principle, firms must recover the short-run variable costs of production when they price their products for the market, which ultimately get passed to consumers in the form of higher retail prices. For a firm to be a profitable valid concern, the firm must recover its marginal cost of production. In a perfectly competitive market, firms price at marginal cost and when marginal costs increase, the cost increases are passed through to the consumer : or at a 0 percent pass-through rate. As a general matter, the pass through rate will be determined by the relative elasticities of supply and demand. When demand is inelastic (as it likely is for German Luxury Vehicles), the pass-through rate to end users is at or near 0 percent.. Consequently, while the direct purchasers were the first to pay supra-competitive prices, all or most of the overcharge was passed along the distribution chain and absorbed by Plaintiff and Class members when they purchased their German Luxury Vehicles for personal use.. Commonly used and well-accepted economic models can be used to measure both the extent and the amount of the supra-competitive charge passed through the chain of distribution to end-user consumers. Thus, the economic harm to Plaintiff and the Class members can be quantified.. The purpose of the conspiratorial conduct of the Defendants and their coconspirators was to raise, fix, or maintain the price of German Luxury Vehicles and, as a direct and foreseeable result, Plaintiff and the Classes paid supra-competitive prices for German Luxury Vehicles during the Class Period. PAGE