Kim v. General Motors, LLC, 99 F. Supp. 3d 1096 (C.D. Cal. 2015)
Kim sued GM for misleadingly advertising EPA estimated mileage figures and numbers derived from these figures as “actual, expected mileage under normal, real world driving conditions.” Kim’s 2011 GMC Terrain crossover vehicle was sold via a brochure, “Going the Extra Mile to Make the Most Out of Every Inch,” that claimed that the Terrain “has the best highway fuel economy in its class at 32 highway miles per gallon” and included a chart with the language “UP TO 600 HWY Miles.” Next to this chart was a map outlining a route from Chicago, past Cleveland and Buffalo, to Rochester, New York (more than 600 miles). And so on (with “EPA estimated” in fine print). In a 2011 press release, Don Johnson, GM’s Vice President of United States Sales Operations, was quoted as saying that “[c]ustomers love the 610–mile range that our compact crossovers provide and they get it without sacrificing capability or style.” GM’s Chevrolet website for its “Equinox” vehicle also claimed “32 MPG highway and a highway driving range of up to 600 miles....” The only mention of an “EPA estimate” was in a footnote in reference to “class-leading highway fuel economy,” not “32 MPG highway,” and, in order to view the footnote, the user had to drag the mouse over the text entitled “view additional disclosures” at the bottom of the web page. Many ads didn’t disclose that the actual real world mileage “will vary.”
Kim brought the usual California claims. First, the court rejected GM’s preemption defense. Federal law provides that “When an average fuel economy standard prescribed under this chapter is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under this chapter.” But “standards” manufacturers must follow are not the same as advertised fuel economy estimates.
Similarly, federal law preempts any “law or regulation on disclosure of fuel economy or fuel operating costs for an automobile” that isn’t identical to federal law about EPA-mandated estimates on the required label on a car. However, Kim wasn’t arguing that disclosure of the EPA mileage estimates was, by itself, deceptive. Instead, the argument was that GM made additional statements that were misleading, and federal law didn’t address those. Kim was hallenging “GM’s use of the EPA estimates in a way that may give consumers the mistaken impression that they are able to achieve real-world mileage and tank range derived from those figures,” and that wasn’t preempted.
There was also no conflict preemption, despite extensive federal regulation of EPA estimates. GM claimed that if “an EPA estimate included in a ‘window sticker’ is not a ‘warranty’ under federal or state law ... then surely any claim that the mere inclusion of this same estimate in an advertisement is such a guaranty, warranty or promise flatly conflicts with federal law.” Under federal law, car dealers must have a window sticker on every new vehicle, detailing, among other things, the fuel economy of the vehicle and estimated annual fuel costs. But nothing in federal law purported to regulate advertising of fuel economy beyond specific requirements for the stickers and associated booklets. There was no reason to think Congress wanted to preempt state regulation of misleading advertising.
The FTC permits automobile manufacturers “to advertise the EPA estimates and make the disclosures required by the FTC for that kind of advertising, or to advertise non-EPA estimates and make the much more onerous FTC-required disclosures for that kind of advertising.” However, while the FTC regarded the phrase “EPA estimate(s)” as the “minimum disclosure necessary to comply with [this regulation]” within all media platforms, the FTC didn’t prevent states from applying stricter disclosure standards under their false advertising laws.
Two of Kim’s three alleged misrepresentations were nonetheless insufficient to state a claim. Claims that GM didn’t adequately disclose the “EPA estimate” or omitted “actual mileage will vary” were insufficient; GM did nothing more than use footnotes to comply with federal disclosure rules. The FTC Industry Guide governing fuel economy advertising specifically states that “inclusion of the phrase ‘EPA Estimate(s)’ is sufficient without more to comply with the FTC’s regulations.”
However, the third set of misrepresentations was adequately pled. The alleged 600-mile range was supplemented with a map showing a 600-mile route, which could lead a reasonable consumer to believe that she would actually get 600 miles on a single tank of gas in the real world. These claims went above and beyond the EPA mandated estimates. “[T]he purpose of EPA fuel economy estimates is to provide a consistent basis for comparing the fuel economy of competing vehicles relative to each other, and … such estimates are not designed to determine the actual expected mileage for a vehicle under ‘real world’ driving conditions.” GM attempted to blur the line between that and the real world, and this was potentially actionable.