Thursday, February 13, 2014

Neither EPA nor FTC preempt fuel economy consumer protection claim

Gilles v. Ford Motor Co. --- F.Supp.2d ----, 2014 WL 544990 (D.Colo. Feb. 12, 2014)

Gilles sued Ford for falsely advertising the gas mileage of his 2013 Ford Escape SE. The court denied a motion to dismiss on preemption grounds.

Gilles alleged that Ford’s website, Ford’s product sheet, the dealer’s website, and Ford’s web video series “Escape My Life!” said that the Escape got 22 miles per gallon in the city and 30 miles per gallon on the highway, but it did not indicate that these figures were EPA estimates. Relying at least in part on these mileage figures and other boasts about the vehicle’s fuel efficiency, he bought the Escape.  But instead, he got 25-26 mpg on the highway at 60 to 65 miles per hour in ideal conditions with no headwind.  He sued for violation of the Colorado Consumer Protection Act, negligent misrepresentation, and fraudulent misrepresentation.

The court determined that express and conflict preemption weren’t involved, so only field preemption would apply.  Ford based its argument on federal law requiring EPA fuel efficiency testing and stickers, posted on each vehicle.  By regulation, the EPA stickers must also advise that “Your actual mileages will vary depending on how you drive and maintain your vehicle” or “actual results will vary for many reasons, including driving conditions and how you drive and maintain your vehicle.”

Here, Gilles didn’t allege that his Escape wasn’t properly posted, nor that the dealer failed to make the EPA-written fuel economy booklet available to him (as also required).  Nor did he allege that Ford provided false or misleading fuel economy data to the EPA. Instead, his argument was that, despite this compliance, Ford simultaneously represented in its ads that the Escape got 30 mpg on the highway without mentioning that this number is an EPA estimate or that actual mileage will vary, and that this representation was false. 

The federal law and regulations didn’t purport to regulate ads, beyond the sticker and booklet requirements. Thus, the court found no EPA-based preemption.

Ford also argued that the FTC’s Guide Concerning Fuel Economy Advertising for New Automobiles preempted the claim.  The guide states that if a manufacturer or dealer makes an express or implied fuel economy representation, it must also clearly and conspicuously disclose “estimated city mpg” and/or “estimated highway mpg,” and that the EPA is the source of those numbers.  The FTC doesn’t require “actual results will vary.”

Again, no preemption.  Gilles alleged that Ford’s ads (1) failed to disclose that the advertised fuel economy standard was based on EPA data and (2) failed to include a disclaimer that actual results may vary.  If true, the first claim would be inconsistent with FTC regulations.  And the second didn’t create any conflict with federal regulation.  As for field preemption, “the idea that Congress meant to occupy the entire field of fuel economy standards is easier to swallow than the idea that it meant to occupy the field of advertising relating to fuel economy.”  Congress explicitly grounded the FTC’s regulatory authority on the EPA sticker/booklet, and the result wasn’t a “comprehensive scheme to regulate all advertising that touches on fuel economy.”  Given that advertising regulation is traditionally a state issue, the necessary clear intent of Congress to preempt state regulation was missing.

However, insofar as Gilles’ second claim (based on failure to say “actual results may vary”) would impose a different labeling requirement than the one required by the FTC regulations, it was preempted by the regulations.

The court also found the complaint plausible under Twiqbal and Rule 9(b).  “In a nutshell, Mr. Gilles suggests that Ford, by advertising the fuel economy of the Escape without disclosing such estimates as EPA estimates, was suggesting that the vehicle ‘actually achieves a specific fuel economy.’” His allegations that he viewed Ford ads that didn’t disclose the relevant information, including YouTube videos and a product sheet, and that salespeople made similar statements, combined with his allegation that his Escape achieved lower mileage than promised, met the plausibility threshold.

Ford argued that Gilles wasn’t specific enough.  Some statements upon which he claimed to have relied were made after he purchased the Escape, and though he pled that he visited Ford’s website “[p]rior to purchasing his Escape,” he didn’t say exactly when, how many times, which portions he viewed, or whether his viewing was connected to the purchase. Also, the website, at least in certain pages, does disclose that the mileage estimates were “EPA-estimated fuel economy.” Plus, Ford argued that Gilles failed to adequately plead an agency relationship between Ford and the dealership. These all went to matters outside the pleadings.

Gilles satisfied Rule 9(b) by pointing to specific statements that Ford made that he relied upon. More specific dates or physical locations where he saw the materials wouldn’t do anything more to put Ford on notice of the claims against it.  In fact, both parties attached certain ads to their filings, and there didn’t seem to be a real dispute about the ads Gilles claimed to have seen.

Nor would the court abstain under the primary jurisdiction doctrine.  The claim didn’t involve matters within an agency’s special competence. Though EPA has primary jurisdiction regarding the accuracy of EPA mileage estimates, this case wasn’t about their accuracy, but about failure to disclose. “These claims are closer to the garden variety fraud cases that are very much within the conventional experience of the courts.”

As a result of this analysis, the Colorado Consumer Protection Act’s exemption for compliance with federal law also didn’t apply.

1 comment:

  1. Good for Mr. Gilles. I am from New York. I leased a 2013 Escape two years ago. Early on, I complained that my gas mileage was too low.
    Ford gave me all kinds of excuses, like, "the car has to get used to how I drive".."it has a break in period"..."It's just an estimate on the sticker"..My current mileage is near 10,000. I still only get around 13.1 MPG local and 17.3 highway. Every other vehicle that I purchased or leased always lived up to the mileage stated on the sticker..without an extended break in period.
    It's a joke. I would like to sue them too. That's a lot of gas for going no where. In addition,there have been three recalls for possible engine fires due to faulty or improperly installed equipment. I am not happy with Ford.