Antitrust Law Daily Wrap Up, ADVERTISING—D. Colo.: Consumer’s claims based on Ford’s MPG advertisements preempted by FTC regulations, (Jun 2, 2014)

By Greg Hammond, J.D.

A consumer’s claims that the Ford Motor Company violated Colorado’s consumer protection and unfair trade practices laws were partially dismissed by the federal district court in Denver. The court determined that the consumer’s advertisement-based claims were preempted by the FTC’s regulations, but statements made by car dealership staff were sufficiently pled (Sanchez v Ford Motor Co., May 29, 2014, Jackson, R).

Background. Juan Sanchez purchased a 2012 Lincoln MKZ Hybrid from Corley’s Albuquerque Lincoln after seeing a television advertisement stating the 2013 model of the same vehicle would achieve 45 combined miles per gallon (mpg) and two dealership staff indicated that he could expect to achieve the advertised fuel efficiency under normal driving conditions. However, Sanchez’s vehicle did not achieve the advertised fuel efficiency, and he brought various claims on his own behalf and on behalf of a class of MKZ Hybrid purchasers, alleging violations of the Colorado Consumer Protection Act, the state’s unfair trade practice laws, and others. Ford argued that Sanchez’s arguments should be dismissed for failure to state a claim because of federal preemption, insufficient pleading, abstention, standing, and under the savings clause of the Colorado Consumer Protection Act.

Sufficiency of pleadings. According to the court, Sanchez based a significant portion of his case on various advertisements aired by Ford. However, Ford argued that Sanchez did not actually view many of the advertisements prior to his purchase and that he did not buy the same vehicle as advertised. Consequently, the court determined that there were only two factual bases for Sanchez to sufficiently allege individual injury, without leaning on other class members’ injuries: (1) the 45 combined mpg graphic and accompanying statements by Ford’s advertisements that Sanchez viewed and (2) statements made by staff at two Lincoln dealerships.

Preemption. Ford argued that Sanchez’s advertisement claims based on the 45 combined mpg graphic were preempted by federal law. The court agreed, noting that the ad included the EPA’s mileage estimates, stated that they were estimates, and indicated that the EPA was the source of the estimates, as required by FTC regulations. Consequently, the court concluded that any alternative requirements sought by Sanchez would conflict with the guidelines set forth by the FTC and that his claims were thus preempted. Although the accompanying statement that normal driving would allow purchasers to match the EPA estimated fuel economy was not preempted by federal law, the court concluded that such language was “non-actionable puffery” that was not made with the purpose of having them accepted as fact. As such, Sanchez’s claims that were based on Ford’s advertisements were dismissed.

Dealership statements. The only other factual basis for Sanchez’s claims was the dealership’s statements to Sanchez regarding the vehicle’s combined mpg. Sanchez alleged that Ford distributed the vehicles through its network of dealers; the owner and a salesperson at Corley’s Albuquerque Lincoln stated that Sanchez could “expect to get the estimated mileage in the real world;” and that staff at another dealership confirmed the fuel economy estimates disclosed in Ford’s advertisements were true. Although the court found that Sanchez’s statements did not conclusively establish an agency relationship, it nevertheless concluded that Sanchez met the minimal burden of pleading an agency relationship. Consequently, Ford’s motion to dismiss Sanchez’s claims based on the dealerships’ statements was denied.

The case number is 13-cv-01924-RBJ.

Attorneys: Jasper Dudley Ward (Jones Ward PLC) for Juan A. Sanchez. Edward Craig Stewart (Wheeler Trigg O'Donnell, LLP) for Ford Motor Co.

Companies: Ford Motor Co.

Cases: Advertising StateUnfairTradePractices ColoradoNews FederalTradeCommissionNews