Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Solar panel manufacturer not liable for allegedly failing to disclose defects, (Apr 24, 2014)

By Jody Coultas, J.D.

Solar panel purchasers failed to state California Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) claims against solar panel manufacturer BP Solar International for allegedly selling defective solar panels, the federal district court in San Francisco has held (Allagas v. BP Solar International, April 21, 2014, Illston, S.). The purchasers were granted leave to amend the dismissed claims.

The purchasers bought solar panels manufactured by BP Solar or purchased properties on which the solar panels were installed. A defect in the solar panel junction box allegedly caused the solder joint to overheat, and the solar panels to break. The purchasers alleged that BP Solar engaged in unfair and deceptive acts, as well as false advertising, in violation of the UCL and CLRA.

CLRA claims. BP Solar was granted dismissal of the purchasers’ CLRA claim by the court. The purchasers argued that BP violated the CLRA by representing "through advertising and other express representations that the Solar Panels had benefits or characteristics they did not actually have and were of a certain standard or quality, when they were not." However, the purchasers failed to specify which facts they relied upon or which of the paragraphs of the complaint supported their claim.

UCL claims. BP Solar’s motions to dismiss the UCL unlawful prong claims were granted, in part, by the court. The UCL prohibits unfair competition by means of any unlawful, unfair, or fraudulent business practice. The purchasers’ unlawful prong claims were based on violations of the CLRA, the Magnuson-Moss Act, and the Song-Beverly Act. The court found that the purchasers sufficiently stated certain claims for breach of express and implied warranty under California law, Song-Beverly Act, and Magnuson-Moss Act. However, the purchasers had not stated express defect and implied warranty claims.

The court granted dismissal of the UCL unfair prong claims for lack of standing. To have standing, the purchasers needed to show a distinct and palpable injury that was caused by BP Solar’s unfair acts. The unfair prong claims were based on BP Solar’s alleged threats to enforce, and actual enforcement of, warranty exclusions, and BP Solar’s failure to disclose the defect. However, there were no allegations of any actual injuries stemming from the enforcement of the warranty exclusions against them, the application of the suppression strategy against them, or injury from fire resulting from the solar panels.

The purchasers also failed to state UCL fraudulent prong claims, according to the court. To state a fraudulent prong claim, the purchasers were required to show that members of the public were likely to be deceived by BP Solar’s advertising and sale of the solar panels by brochures and warranties. These statements allegedly deceived consumers into believing the panels were durable, safe, and reliable, when they were not durable or safe and failed to produce the specified power level within the warranty period. However, the purchasers failed to allege specifically which statements were fraudulent, or which statements they relied on in deciding to purchase the solar panels.

Additional claims. The court granted BP Solar’s motion to dismiss claims for breach of the express defect warranty, breach of the express power warranty, and breach of implied warranty under California law, the Song-Beverly Act, and the Magnuson-Moss Act. Claims for breach of the express power warranty under the Magnuson-Moss Act and Song-Beverly Act survived.

The case is No. C 14-00560 SI.

Attorneys: Mindy Monhai Wong (Birka White Law Offices) for Michael Allagas. Matthew T. Heartney (Arnold & Porter LLP) for BP Solar International, Inc. and Home Depot U.S.A., Inc.

Companies: BP Solar International, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews