Antitrust Law Daily Wrap Up, ADVERTISING—S.D.N.Y.: Ford fuel economy misrepresentation claims tossed, (Nov 13, 2015)

By Greg Hammond, J.D.

Ford Motor Co. was entitled to dismissal of consumers’ claims that the vehicle manufacturer misrepresented the fuel economy of its 2013 Ford Fusion Hybrid and 2013 Ford C-MAX vehicles. In partially granting Ford’s motion to dismiss, the federal district court in White Plains, New York, concluded that some of the misrepresentation claims were preempted by the Environmental Policy and Conservation Act (EPCA) and FTC regulations, barred by the primary jurisdiction doctrine, or insufficiently pleaded (In re Ford Fusion and C-MAX Fuel Economy Litigation, November 12, 2015, Karas, K.).

Consumers claimed that Ford made a number of misrepresentations and material omissions in advertisements concerning the fuel economy of the 2013 Fusion and C-MAX. While Ford purportedly emphasized that the vehicles would deliver “47 MPG,” consumers allege that, under real-world driving conditions, they were consistently unable to get anywhere near the advertised 47 MPG. The consumers consequently brought claims under state false advertising, consumer protection, and unfair trade practice laws. Ford subsequently moved to dismiss, arguing: (1) the consumers lacked standing; (2) the claims were preempted under federal law; (3) the court should abstain under the primary jurisdiction doctrine; and (4) the consumers have failed to state a claim.

Standing. Ford first argued that the consumers’ claims were a direct attack on Ford’s disclosure and advertisement of the EPA estimated fuel economy, which was impermissible by a private litigant under the EPCA. The court denied the motion to dismiss based on standing grounds, however, finding that the plaintiffs were not challenging Ford’s compliance with the EPCA. Instead, the consumers relied on causes of action provided by state and common law that were separate and apart from the provisions of the EPCA.

Preemption. Nevertheless, the misrepresentation claims were partially preempted by federal law. In particular, the court concluded that to the extent that the consumers’ claims were premised on the notion that the ads included EPA estimates, rather than some other “actual” fuel economy calculation, or to the extent the consumers’ claims were based on the notion that Ford failed to independently test and disclose the fuel economy of the C-MAX in order to determine its “actual” performance, those claims were preempted by the EPCA and FTC regulations, because those claims sought to impose a regime above and beyond that required by the federal regulations.

Primary jurisdiction. Similarly, the court found that deciding whether there was a way to calculate fuel economy for the C-MAX, and whether that should be disclosed, directly implicated the methods devised by the EPA and the disclosure requirements established by the FTC. Those claims were barred by the primary jurisdiction doctrine because they fell within the competence and mandate of the EPA and FTC. The question, however, of whether the advertisements concerning the accuracy of EPA-estimated fuel economy were misleading was a question the court concluded it could decide.

Failure to state a claim. Lastly, Ford argued that the consumers failed to state a claim because no individual plaintiff pleaded facts sufficient to demonstrate that he or she relied on, or was injured by, an actionable representation from Ford. The court first concluded that any claims based on the mere inclusion of EPA estimated fuel economy and associated disclaimer did not state a claim upon which relief can be granted and could therefore be dismissed. The court noted, however, that these claims were also already found to be preempted.

Conversely, claims that target specific “additional” representations that go beyond the EPA estimates state a claim under state consumer protection law, the court concluded. In particular, the court noted that the consumers sufficiently distinguished these additional representations from the mere use of EPA estimates, and they alleged with sufficient specificity the circumstances constituting the alleged fraudulent acts—namely the nature and timing of the advertisements specifically described in the complaint.

Nevertheless, reviewing the claims with regard to each individual plaintiff, the court determined that it could not find that each consumer relied on the advertising campaign. Those claims were consequently dismissed, but the plaintiffs were granted 30 days to amend the consolidated amended class action complaint to specifically allege the advertisements that each individual consumer relied upon.

The case number is 13-MD-2450 (KMK).

Attorneys: Paul Geller (Robbins Geller Rudman & Dowd LLP) and Eric Gibbs (Girard Gibbs LLP) for plaintiffs. Joel Dewey (DLA Piper LLP) for Ford Motor Co.

Companies: Ford Motor Co.

Cases: Advertising ConsumerProtection StateUnfairTradePractices NewYorkNews