Class action from 2007 discussed here. Paduano bought a new 2004 Honda Civic Hybrid in 2004 (as, incidentally, did I) and subsequently became disillusioned with its fuel efficiency, which was about half of the EPA fuel economy estimate disclosed on the federally mandated new car label (47 mpg city/48 mpg highway). As required by federal regulations, the label also said that “ACTUAL MILEAGE will vary with options, driving conditions, driving habits and vehicle[’]s condition.”
After a Honda dealership employee told him that driving conditions affect hybrids’ fuel efficiency more than conventional cars’ fuel efficiency, and that he’d get better mileage only if he “significantly altered” his driving habits, Paduano asked Honda to buy the car back from him. Honda refused and Paduano sued for breach of warranty and false advertising. (On a personal note, I’ve been trained to drive differently simply by watching the mileage bar on my car. Indeed, if all cars had mileage indicators and not just speed indicators, I suspect we’d see an improvement in fuel economy simply because of the human impulse to maximize what is measured. Unlike Paduano, I didn’t mind being trained by my car. As for mileage, these days I get roughly 42 mpg on good tanks, 30 in the cold making mostly short trips.)
Honda argued that the federal Energy Policy and Conservation Act (EPCA) preempted all Paduano’s claims, and that the claims lacked merit in any event. The trial court granted summary judgment in Honda’s favor; the appellate court affirmed as to the warranty claims, but reversed on the false advertising claims.
Paduano said that he’d read and relied on statements in Honda’s ad brochure before buying.
In his first year of ownership, Paduano took the car to several Honda dealerships to find out how to get better mileage, and he was told that the engine needed a break-in period, described variously to him as 3000, 5000-10,000, and 7500 miles. In fact, a Honda representative testified in deposition, no such break-in period is required. Another dealership employee told Paduano that to get EPA-level gas mileage, a driver must drive in a specialized manner that would be difficult to do on the highway and would create a driving hazard. He called Honda’s customer service line and was told that Honda had received many complaints about mileage, and a representative told him that both Honda and Toyota had approached the EPA to change the mileage rating to make it more accurate.
Honda argued that EPCA’s regulation of fuel estimate disclosures preempted all Paduano’s claims. EPCA, and associated EPA & FTC regulations, are designed to help consumers compare vehicles’ fuel economy. The law thus defines “average fuel economy” and “average fuel economy standard,” and specifies that “fuel economy” means the average mpg as determined by the EPA. The law tells the EPA to establish testing and calculation procedures for this purpose. And every car maker must attach a prominent label on each new car disclosing, among other things, its fuel economy. The law provides that the required disclosure does not establish a warranty under federal or state law. The law’s preemption provision bars states from imposing laws or regulations “related to fuel economy standards or average fuel economy standards” that are not identical to the federal rules.
The majority held that Paduano’s warranty claims failed, because they were based on the idea that Honda warranted that his car would achieve at or near EPA-estimated mpg. But the EPA estimate isn’t a warranty, and Honda didn’t make any other warranty.
The false advertising claims, by contrast, presented triable issues of fact. Paduano’s allegations focusing on a Honda sales brochure prominently featuring “51 MPG” didn’t state a claim, because the brochure clearly disclosed this was the top estimate for a manual transmission, whereas the same estimate for an automatic was 48 mpg.
But the brochure also stated, “Just drive the Hybrid like you would a conventional car and save on fuel bills,” as part of an answer to the question “I never have to plug it in, right?” The brochure also told customers that they didn’t need to do “anything special” to get “terrific gas mileage.” A factfinder could determine that these statements were misleading, given Paduano’s evidence that superior mileage requires driving differently. Along with the allegations above, Paduano alleged that a Honda representative told him that hybrids are “more dramatically affected by outside influences such as air conditioning, driving habits, windows up/down, and vehicle load than normal combustion engines.” Moreover, Honda didn’t tell him that short trips penalize hybrid efficiency as compared to regular cars.
Honda pointed out that “Just drive the Hybrid like you would a conventional car, while saving on fuel bills” was in the context of an answer to a question about plugging the car in, addressing a different misconception. But the court thought that this statement doesn’t seem to refer to the fact that one need not plug in the car when not driving, and the reference to saving on fuel bills wasn’t responsive to the posed question. (I agree, it’s infelicitous. As a factfinder, though, I’d probably find that the context sufficiently constrained the meaning of the claim.)
There was also a separate question, “Is there anything special I have to do?” to which the answer was “You just have to love saving money and getting terrific gas mileage.” That, the court held, implied (I might even go with necessarily implied) that the driver need not do anything special as compared with driving a conventional car. (So the real question is: what counts as special? I’m not sure how that interacts with the fact that mileage is better on longer trips, for example.) Honda didn’t show that its claims couldn’t mislead a reasonable person as a matter of law.
And Paduano also had the advantage of the oral representations alleged: “[Y]ou cannot drive in a normal manner in order to get the mileage,” by which the Honda representative meant “[a]ccelerating with the flow of traffic, stopping with the flow of traffic, accelerating as by law you're supposed to [do] to get on the highway, being at highway speed at the time that you're entering the first lane.” Paduano alleged that the Honda employee told him “You can’t do any of those [usual] things” if you want to get better mileage. (I consider this misleading, but maybe not in a way that helps Paduano. You definitely don’t get the best mileage if you’ve got the pedal to the floor or if you’re constantly stamping on the brakes, but isn’t that true of conventional cars too? You get the best mileage by accelerating and decelerating smoothly. Once you’re at speed, you do fine with a hybrid. And what Paduano defines as “stopping with the flow of traffic” I probably define as “not paying attention until you have to slam on the brakes”; if you take your foot off the gas in order to slow down rather than hit the brakes, you get excellent mileage.)
The more that I think about it, the more this case resembles McNeil-PPC v. Pfizer, the dental floss case from SDNY, where the key question was what it meant to “floss”—did it mean to floss correctly, or to floss the way most people actually floss, which is to say badly. Does “driving normally” mean “driving wastefully”? If it does, then Honda’s statements were probably misleading. Otherwise, probably not. (Does it matter that most hybrid customers are likely to be driving the hybrid to make a statement about fuel economy?)
The majority concluded that Paduano’s evidence could be found to show that one might have to drive the hybrid “in something other than the usual manner of driving a conventional vehicle” in order to obtain near-EPA estimated fuel economy. Honda also admitted the existence of other, similar complaints, which is further evidence that its claims might have been misleading.
Paduano also testified that he relied on the claims, making out a necessary element of his false advertising case.
The remaining question was whether the false advertising claims were preempted. Honda argued that Paduano was trying to claim that Honda violated California law by repeating the EPA fuel economy estimates. The majority rejected this characterization. It applied a presumption against preemption, especially given California’s interest in consumer protection. California’s false advertising law was not an expressly preempted “law or regulation related to fuel economy standards.” Enforcing the law wouldn’t in any way impose fuel economy requirements on Honda.
Nor was Paduano’s claim attempting to impose an expressly preempted disclosure requirement that differed from federal standards. Honda argued that Paduano’s claim depended on the idea that disclosing the EPA mileage estimate by itself is deceptive unless accompanied by additional disclosures. However, that wasn’t Paduano’s argument. Instead, Paduano alleged that Honda voluntarily made additional assertions beyond the EPA mileage disclosures. (That does seem to raise a causation issue. Would Paduano really have relied on the extra claims, but not relied on the EPA mileage? Maybe; I suspect it’s generally understood by most car buyers that EPA estimates, even for conventional cars, are a bit wonky.) The majority thought this case was similar to Altria Group, Inc. v. Good, in which the Supreme Court found that state-law false advertising claims against cigarette makers weren’t preempted by federal regulation of cigarette labeling. A general rule creating a duty not to deceive doesn’t directly interfere with labeling requirements.
Further, implied preemption was no barrier. Given the express preemption provision in EPCA, implied preemption was less of a concern. But Honda argued that if Paduano won, it would have to make additional, even contradictory, disclosures to protect itself from expectations created by the EPA estimates. But the court thought that Honda’s claims went beyond required disclosures and made claims about the manner of driving. If Paduano wins, Honda would simply have to stop making claims about how to obtain high fuel economy. Indeed, the EPA sticker specifically says actual mileage will vary “depending on how you drive an maintain your vehicle,” but Honda’s brochure suggested that driving habits didn’t matter.
And if the EPA estimates allow consumers to make an apples-to-apples comparison, then misleading claims about how to achieve greater fuel economy interfere with the aims of federal law.
One judge dissented in part on the ground that the false advertising claims should also have been preempted. Judge O’Rourke argued that if Paduano won, Honda would be required to disclose more than the EPA estimates, thus impermissibly interfering with the federal regime.
Even without preemption, though, the dissent would have found the statements at issue nothing more than nonactionable puffery. The statements in the Honda brochure were not the type on which a reasonable consumer could be expected to rely; only 0.7% of Honda Civic Hybrid owners in California complained about gas mileage. (Courts often hold that deceived consumers rarely bother to complain, so absence of evidence is not evidence of absence, but perhaps with an expensive item like a car complaints should be more common.)
Anyway, the dissent reasoned, the claim that driving a hybrid in ordinary fashion will save on fuel “is true and basically definitional” because at times the gas engine will shut off, saving fuel, and because the electric motor adds power while accelerating. Paduano admitted in deposition that any car’s mileage would decrease with aggressive driving. The dissent thought that the majority’s theory—that the brochure could mislead people into thinking they could drive a car “normally” and still get EPA-level mileage—depends on consumers’ reliance on the EPA estimates. But of course, a claim based on EPA estimates is not actionable. (I think this is pretty close to my question about causation: would the EPA estimates alone mislead the same consumers who were, let’s assume, misled by the additional statements?)
Puffery protects claims that are either vague or highly subjective. In other car cases, courts found the following statements to be puffery: “the Samurai handles differently than any ordinary passenger car”; the Suzuki 4x4 has “all the goodies of 4-wheel drive”; antilock brakes are “99 percent more effective than protective systems” and “[a] driver is 100 times more likely to benefit from a vehicle’s crash-avoidance capabilities (such as anti-lock brakes) than from its crash-survival capabilities (such as air bags).” Statements about “terrific” mileage without doing anything “special” were, to the dissent, “nebulous, nonspecific assertions” similar to those other puffs. A comparison to an unspecified conventional car is not falsifiable, not informative, and therefore not actionable.
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