Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—WDArk: Volkswagen Not Liable For Failing to Warn Purchasers of Allegedly Defective Transmission System, (Feb 27, 2013)

By Jody Coultas, J.D.

A Volkswagen purchaser could not state an Arkansas Deceptive Trade Practices Act (DTPA) claim against Volkswagen Group of America, Inc. based on allegedly false and deceptive advertising related to a design defect in the New Beetle model, according to the federal district court in Fort Smith, Arkansas (White v. Volkswagen Group of America, Inc., February 25, 2013, Holmes III, P.).

The purchaser alleged that Volkswagen’s 2003-2007 New Beetle automobiles contained design and/or manufacturing defects that caused “hard shifting,” or difficult and unpredictable shifting into gear during normal driving, requiring replacement of the vehicles’ transmission systems prior to the end of the warranty offered. Volkswagen allegedly knew of the defect at the time of sale and failed to disclose the defect in violation of the DTPA.

Because the purchaser failed to specify what false representations were made by Volkswagen or that she relied on those representations in making the decision to purchase the vehicle, the court dismissed the DTPA claim. The purchaser alleged that Volkswagen made false representations as to the characteristics and benefits of the New Beetle advertised the warranties purportedly covering the vehicles with the intent not to sell them as advertised, and engaged in representations and omissions in connection with the advertising, marketing, and offering for sale of the vehicles that were deceptive and unconscionable. However, the purchaser failed to specify what advertising included the false representations. An objection to all positive advertising is too general to state a claim. Furthermore, none of the advertising could be construed as the cause of the purchaser’s injury.

Without any basis for imposing a duty to disclose any alleged defect to purchasers, the court dismissed the purchaser’s DTPA claims based on fraudulent omissions and fraudulent concealment. The purchaser alleged that Volkswagen fraudulently concealed the latent defect in the New Beetles’ transmission systems. The DTPA statute of limitations period is five years, which would preclude the purchaser’s DTPA claim filed seven years after the original date of manufacture of her vehicle. Even if the statute was tolled by Volkswagen alleged knowledge of the latent defect, there was no privity of contract between the purchaser and Volkswagen, and no confidential or fiduciary relationship exists or existed between them.

The case is No. 2:11-CV-02243.

Attorneys: Roy Arie Katriel (The Katriel Law Firm) for Shirley White. Jeffrey L. Chase (Herzfeld Rubin P.C.) for Volkswagen Group of America, Inc.

Companies: Volkswagen Group of America, Inc.

Cases: StateUnfairTradePractices ArkansasNews