My understanding is that in this case Mercedes if fully liable if something goes wrong - so you are allowed to watch a movie or read a book. If the car proceeds to crash into the car in front of you, Mercedes is on the hook, not you.

I doubt your liability is waved when reading a book while using the adaptive cruise control in your car.

Reading https://insideevs.com/news/584686/mercedes-level-3-autonomou...:

“Like related Level 2 driver-assistance systems, Mercedes' Level 3 technology handles driving speed, following distance, and steering. In the meantime, it keeps tabs on a preset route and traffic signs and signals. The system can also brake and/or maneuver to avoid potential situations.”

So, it reacts to traffic signs, and can change lanes to pass slower cars.