Hybrid vigor: Honda class action claims survive

True v. American Honda Motor Co., Inc., --- F.Supp.2d ----, 2007 WL 3054569 (C.D. Cal.)

Plaintiff sued for allegedly false and deceptive claims about the fuel efficiency and cost savings of the Honda Civic Hybrid automobile. Disclosure: I own and love a Civic hybrid, and think that we’d see major gas mileage improvements in non-hybrid cars if every car had the same MPG indicator as a hybrid does, just by virtue of people training themselves to drive more efficiently once MPG was more salient.

Anyway, plaintiff alleged that actual fuel efficiency was up to 53% less than advertised – plaintiff averaged 32 MPG in mixed highway and city driving over six months, compared to 49-50 advertised. A Consumer Reports article in Oct. 2005 reported only 26 MPG in the city. (My experience: 40 MPG pretty much on the nose, in mostly city/Beltway traffic.)

Plaintiff alleged that mileage claims were important to the putative class, and they were communicated to every member because federal law requires every new car, including the hybrid, to display at the point of sale a sticker showing fuel estimates based on EPA-mandated methods. Federal law also requires the inclusion of “Actual mileage will vary,” but Honda’s print and internet ads downplayed (using “may” instead of “will”) or omitted the disclaimer.

Honda argued that the state law claims were preempted due to conflict with the Energy Policy and Conservation Act, 49 U.S.C. § 32901 et seq. The court applied a presumption against preemption because of the state’s historic powers to protect consumers. EPCA requires the display of the stickers and requires dealers to make a booklet on fuel economy available to consumers. But nothing in the EPCA or its accompanying regulations purports to regulate fuel economy advertising beyond that. Preemption thus only extends to state regulation of the sticker or the booklet.

Honda argued that plaintiff was really challenging EPA testing guidelines, but the court didn't see that in the complaint. I am sympathetic to Honda’s point, however; the problem can be traced to the testing guidelines, which everyone knows overstate mileage. The difficulty is that with a new technology, the hybrid, consumers don’t have enough knowledge to tell whether the same discounting should apply to hybrid MPG claims. I know I hoped to get advertised MPG. I, like every other ordinary consumer, lacked the expertise to know whether EPA’s tests would be more accurate with respect to hybrids, but it’s reasonable to think they might be, because the basic selling point of the car was its better mileage. Nonetheless, because plaintiff was challenging non-federally-regulated ads, there was no preemption.

Honda also argued that plaintiff failed to state a claim because he didn’t allege reliance. California UCL/FAL plaintiffs may claim an inference of reliance when a misrepresentation is material. Plaintiff’s allegation that MPG was substantial/controlling in hybrid purchase decisions was sufficient to state a claim.

Finally, Honda argued that the complaint needed to plead fraud with particularity under Rule 9(b). The court, however, found the complaint sufficient to provide fair notice; at this point, plaintiff didn’t need to identify the particular ads that induced his purchase.