Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Colo.: Consumer’s fuel economy advertising claims against auto manufacturer were not preempted by federal law, (Feb 14, 2014)

By Linda O’Brien, J.D., LL.M.

A consumer’s claims against an automobile manufacturer for failing to disclose that the advertised fuel economy of one of its vehicles was based on Environmental Protection Agency (EPA) data in violation of the Colorado Consumer Protection Act (CCPA) was not preempted by federal law, the federal district court in Denver has decided (Gilles v. Ford Motor Company, February 12, 2014, Jackson, R.).

John Gilles was in the market for a new car in 2012. He viewed the Ford Motor Company website and saw an advertisement for its Ford Escape stating that the vehicle achieved 22 miles per gallon in the city and 30 miles per gallon on the highway. The product sheet and Ford web videos made the same statements. Gilles purchased the vehicle, relying in part on the mileage figures and other claims against the vehicle’s fuel economy. He drove the vehicle for several thousand miles and averaged 25 to 26 miles per gallon on the highway.

Gilles filed suit against Ford for negligent and fraudulent misrepresentation and a violation of the CCPA, alleging that the company website advertisement, product sheet, and web videos advertised the Escape’s miles per gallon without indicating that the mileage figures were based on estimates by the EPA. Ford moved to dismiss.

Preemption. The court determined that Gilles claim under the CCPA was not preempted by federal law. Federal preemption occurs in three situations: (1) where Congress specifically defines the extent to which enactment preempts state laws; (2) state law regulates conduct in the area that the federal government intended to exclusively regulate; and (3) it is impossible for a private party to comply with both federal and state requirements. The FTC regulations provide when a manufacturer includes mileage figures in an advertisement, it must include the EPA mileage estimates, state that the figures are estimates, and indicate that the EPA is the source of the estimates. Gilles alleged that the Escape advertisements included the EPA estimated fuel economy figures but failed to disclose that the advertised fuel economy standard was based on EPA data or include a disclaimer that actual results may vary. Since Gilles’ claims under state law do not conflict with federal regulations, the FTC regulations do not expressly or impliedly preempt the claim.

Plausibility. Gilles alleged sufficient facts, if true, that would allow the court to draw the inference that Ford violated the CCPA and engaged in fraud, according to the court. A plaintiff must allege sufficient facts to state a claim for relief that is plausible and not merely speculative. In this case, Gilles identified the specific statements that Ford made that he relied upon and these facts are sufficient to meet the plausibility threshold.

CCPA exemption. Finally, the court found that the exemption for compliance with federal law under the CCPA did not apply. The CCPA expressly states that the statute does not apply to conduct in compliance with federal, state, or local laws. In rejecting Ford’s argument that the act of making a statement in an advertisement that was authorized under FTC guidance cannot provide the basis for a CCPA claim, the court noted that the gravamen of Gilles complaint was that, while Ford complied with federal regulations, the advertisements made claims about the vehicle’s fuel economy without disclosing that the claims were based on EPA estimates. The FTC regulations did not address the facts alleged in Gilles complaint, therefore, the CCPA savings clause did not apply.

The case is No. 13-cv-00357-RBJ.

Attorneys: Gordon Michael Hadfield (Erik G. Fischer, PC) for John A. Gilles. Edward Craig Stewart (Wheeler Trigg O’Donnell, LLP) for Ford Motor Company

Companies: Ford Motor Company

Cases: ConsumerProtection Advertising StateUnfairTradePractices ColoradoNews