The within proposed automotive defect multi-jurisdictional class proceeding involves certain model and model year Bayerishce Motoren Werke (“BMW”)-brand vehicles, defined below as “Affected Class Vehicles”, engineered, designed, developed, manufactured, assembled, tested, marketed, distributed, supplied, leased and/or sold by the Defendants, BAYERISCHE MOTOREN WERKE AG (“BMW AG”), BMW OF NORTH AMERICA, LLC (“BMW NA”), and BMW CANADA INC. (“BMW Canada”), that are equipped with the Defendants’ xDrive all-wheel drive system. In particular, all Affected Class Vehicles are equipped with substantially same or similar transfer cases, which were factory-filled with out-of-specification transfer case fluid leading to accelerated wear and permanent damage to internal components of the transfer case, including, inter alia, the multi-plate clutch system, gears, bearings and seals, thereby causing the transfer case to improperly transmit the torque between the front and rear wheels of the vehicle (the “Transfer Case Defect”).

The Transfer Case Defect manifests in the form of jerking or shuddering sensations when driving the vehicle, especially when shifting gears, making turns, or driving at low speeds, which adversely affects the drivability of the Affected Class Vehicles and causes the transfer cases to fail and require premature replacement. As such, the Transfer Case Defect poses a real, substantial and imminent risk of harm and/or injury to vehicle occupants.

Before replacing the defective transfer cases, the Defendants frequently require owners and/or lessees of the Affected Class Vehicles to replace the transfer case fluid at a cost ranging from approximately $400 to $1,500 when the fluid replacement is not covered under warranty. However, except for certain high-performance vehicles like the Defendants’ M-series models, transfer case fluid is factory-filled with the expectation that it will last for the life of the vehicle. Accordingly, transfer case fluid replacement is not listed on the maintenance schedule that the Defendants provide with every vehicle.

Despite the costly repair, many owners and/or lessees of the Affected Class Vehicles who replaced the transfer case fluid continued to experience the Transfer Case Defect and were subsequently informed by the BMW dealership or independent mechanics that the transfer case itself required replacement.

Transfer cases are designed, built, and installed with the expectation that they will last for the life of the vehicle.

No warning lights or messages appear on the Affected Class Vehicles’ cluster gauge when the transfer case is damaged, meaning that it is very difficult to diagnose the issue until it progresses far enough to manifest as a jerking or shuddering sensation when driving the vehicle.

The Defendants have exclusive knowledge and possession of facts and/or information pertaining to the Transfer Case Defect, which were material to the Plaintiff and putative class members, who could not have reasonably known of the Transfer Case Defect. Under the circumstances, the Defendants had an affirmative duty to disclose the Transfer Case Defect at the point of sale and/or lease of the Affected Class Vehicles to putative class members and consumers.

In particular, the Defendants knew, or ought to have known, since at least 2018 of the risk of premature transfer case failure in the Affected Class Vehicles, based on standard pre-sale design, testing, and validation information collected by reasonably prudent vehicle manufacturers.

The Defendants have themselves acknowledged the Transfer Case Defect since at least May 2020 through their own Service Industry Bulletins (“SIBs”). The Defendants’ SIB 27-02-20 is titled “Jerking or Shuddering From The Driveline (XDrive Transfer Case ATX13-X).” The Defendants issued four further revised SIBs, with the most recent being as of June 2025 regarding the same transfer case issue and indicated additional affected BMW-brand vehicles.

In the past, when owners and/or lessees of the Affected Class Vehicles who experienced the Transfer Case Defect contacted the Defendants, and/or their authorized dealers, they disavowed all knowledge of the problem and refused to fully reimburse owners for the repairs and transfer case replacement, which typically costs anywhere from $7,000 to $13,000.

Despite having knowledge of the Transfer Case Defect since at least 2018, the Defendants have repeatedly failed to disclose and actively concealed the Transfer Case Defect from putative class members and consumers and continued to market and represent the Affected Class Vehicles as safe, reliable and durable vehicles which, as a result of the Transfer Case Defect, they are not.

The Defendants cover the fluid change replacement and transfer case replacement for owners and/or lessees of the Affected Class Vehicles that are still within the original New Vehicle Limited Warranty but do not cover either of these services for owners and/or lessees of the Affected Class Vehicles whose warranty has expired. Furthermore, the Defendants’ SIBs explicitly state that transfer case fluid replacement is not covered under the Certified Pre-Owned warranty or Extended Service Contract even though the transfer case itself is not excluded from coverage by the terms of the Certified Pre-Owned warranty.

The Defendants have issued no recall or extended warranty regarding the Transfer Case Defect in the Affected Class Vehicles, nor sent notice to owners and/or lessees of the Affected Class Vehicles regarding the possibility of premature transfer case failure. Instead, the Defendants have concealed and continue to actively conceal the Transfer Case Defect in the Affected Class Vehicles.

As a direct and proximate result of the Defendants’ unfair, misleading, deceptive, and/or fraudulent business practices in failing to disclose the Transfer Case Defect, the Plaintiff and putative class members: (i) overpaid for the Affected Class Vehicles, either through a higher purchase price and/or lease payments, which vehicles are non-merchantable and not fit for their ordinary purpose due to the Transfer Case Defect; (ii) overpaid for the Affected Class Vehicles as the Transfer Case Defect significantly diminishes their value; (iii) have Affected Class Vehicles that are unsafe, unreliable and dangerous in their operation; (iv) have Affected Class Vehicles that have significantly reduced re-sale value; and/or (v) have paid, and will continue to be required to pay, out-of-pocket costs to replace transfer case fluid that should not require replacement and to replace defective transfer cases during the expected useful life of the Affected Class Vehicles.

The Plaintiff and putative class members have purchased and/or leased Affected Class Vehicles that they would not have otherwise purchased and/or leased, or would have paid less for, had they known of the Transfer Case Defect at the point of sale and/or lease. The Plaintiff and putative class members have consequently suffered ascertainable losses and actual damages as a result of the Defendants’ unlawful conduct.

In engineering, designing, developing, manufacturing, assembling, testing, marketing, distributing, supplying, leasing and/or selling the Affected Class Vehicles, the Defendants have engaged in unfair, deceptive, and/or misleading consumer practices, and further have breached their express warranties.

No reasonable consumer would have purchased and/or leased an Affected Class Vehicle had the Defendants made full and complete disclosure of the Transfer Case Defect or would have paid a lesser price. 

The Plaintiff and putative class members expected that the Defendants would disclose, and not actively conceal, material facts about the existence of any defect that will result in expensive and non-ordinary repairs. The Defendants failed to do so.

The Plaintiff seeks relief for all other owners and/or lessees of the Affected Class Vehicles with the Transfer Case Defect, including, inter alia, recovery of damages, repair under various provincial consumer protection legislation, breach of express warranty, breach of implied warranty of merchantability and reimbursement of all expenses associated with the repair of the Affected Class Vehicles.