Wednesday, September 01, 2021

Found on road deceptive: "track car" claim plausibly misleading

Tershakovec v. Ford Motor Co., --- F.Supp.3d ----, 2021 WL 2700347, No. 17-21087-CIV-MORENO (S.D. Fla. Jul. 1, 2021)

In this multistate class action based on purchases of the Shelby GT350 Mustang, the court granted Ford summary judgment on some claims and certified nine state law classes and Magnuson-Moss Warranty Act classes in Texas and California. Background:

The Shelby Mustang is a performance version of the standard Mustang. It is several cuts above both the base version of the Mustang and the Mustang GT (which has a V8 engine). Only true car enthusiasts opt for the Shelby GT350, and they do so mainly for its racing and track capabilities. In fact, the name “Shelby” comes from Carroll Shelby, a race car driver and designer for Ford in the mid-20th century. Indeed, Ford touted the Shelby as “an all-day track car that is also street legal.”

There were five packages: Base, Technology, Track, R, and R technology. The two first didn’t come with coolers that prevent the engine from overheating at consistently high rotations per minute, allowing the driver to drive faster for longer. In order to prevent overheating in the lower Shelbys, Ford programmed those packages to rapidly decelerate when engine temperature got too high. This “Limp Mode” was an intentional design choice; the coolers were removed from those two packages before launch, allegedly to increase profit margins.

“Plaintiffs allege that many of their vehicles unexpectedly entered Limp Mode, both on the track and the open road. The Shelbys are essentially unusable for sustained track driving—the main reason many Plaintiffs bought the car.” Plaintiffs argued, in essence: “1) Ford advertised all Shelbys as track-capable, the advertising induced Plaintiffs to purchase the car, and then the car did not perform as advertised. 2) The consistent occurrence of limp mode is a breach of Ford’s express and implied warranties.”

Ford argued that its ads were puffery.

It advertised the entire Shelby lineup as “track-ready” and “track-capable.” And it that knew race-track enthusiasts were the Shelbys target audience. For example, “[i]n a track day invitation sent to all Shelby owners post-purchase, Ford’s marketing manager wrote that the GT350 had ‘exceptional race track capabilities, we’re sure that’s one of the reasons you purchased your GT350—perhaps the main reason.’” Other advertising materials include: “an all-day track car that’s also street legal,” “tested endlessly on the most challenging roads and tracks in the world,” “we wanted to build the best possible Mustang for the places we most love to drive – challenging back roads with a variety of corners and elevation changes – and the track on weekends,” and “track-focused.”

Still, Ford argued that the claims were puffery because no one really agrees on what “track-capable” means and because its ads differentiated the Base and Tech models from the others by lavishing much more “track” praise on the higher end models and specifically warning consumers that Base and Tech models would need aftermarket coolers.

Puffery: “At the summary judgment stage, this argument, much like the Mustangs’ engines, blows smoke.” Although individual plaintiffs offered different definitions of what the term meant to them, this was a question of fact for a jury. For example, one press release touted the Shelby GT350s’ transmission as “developed with all-day track capability and high-RPM capability at the forefront.” “This statement is specific—it focuses on the car’s transmission—and it is empirically verifiable.” The court thought Ford’s argument was “ironic”: “Racing is an activity obsessed with metrics and objective verification—victory is often decided by tenths of a second and Ford relentlessly tests its performance vehicles so that they meet the expectations of their target customer, considered ‘gearheads.’” Internal Ford documents show “that the Base/Tech Shelbys caught fire after being put through their paces by Ford Engineering, and afterwards, the engineering team informed the marketing team that it was concerned that the Base Shelby was not ‘track durable’ nor ‘appropriate for track use.’”  If Ford thinks those terms are objective, a reasonable jury could agree.

Did the ads as a whole avoid deceptiveness by warning consumers about the need for aftermarket coolers and specifying elsewhere that certain non-Base and non-Technology models were the “track day specialists”? Again, a reasonable juror could find that a reasonable consumer would be misled by the “net impression” created by Ford’s advertising. The recommendation to add coolers if they planned on “sustained high speeds or track day use” “came on page 25 of the Supplemental Owner’s Guide—a pamphlet only available in the glove box of the car one has already purchased.” (Ford argued that the Guide was available online pre-purchase, but that was disputed—and by the way, not the kind of thing you should have to read the supplemental manual to find out.) And while a Ford marketing employee told one customer that if he planned to use his Technology package Shelby on the racetrack for “sustained lap sessions, we would still recommend that you purchase coolers,” that was one consumer, not the general consuming public.

Nor did marketing the R model as “the most track-ready” and the Track model as the “track-day specialist” while staying silent on the Base and Technology models’ track capabilities avoid deception. “With all due respect to American engineering, Plaintiffs surely knew a Ferrari would be better suited for intense track driving than the Base Shelby, but they were nonetheless entitled to rely on Ford’s representation that its car was an ‘all-day track car.’”

The jury would have to decide whether individual plaintiffs relied on these claims, even though many saw online reviews suggesting potential problems or had other possible sources of knowledge. Ford argued that plaintiffs who took delivery after February 2016 could not reasonably claim to be misled “because of information and rumors available on Internet forums that the cars at issue could not do track days. Plainly, this argument is not a summary judgment winner. … [P]osts on Internet forums are not sufficient evidence to put the question beyond the debate of a jury.”

Omission claims: There was not enough evidence that Ford knew that Limp Mode would occur on public roads under normal driving conditions. One Ford Performance parts manager was aware of a consumer report that Limp Mode occurred on a public road; a 2014 internal email from Ford’s Chief Functional Engineer warned not to send cars without coolers to Germany (likely due to the manner of driving on the autobahn); and Ford added standard coolers in later model years. “Of all the evidence in this case, it is telling that there is only one internal email that mentions Limp Mode on public roads; and even then, the email merely relays a single, unverified consumer report with no other diagnostic information.” This wasn’t sufficient to show Ford’s knowledge that Limp Mode would begin under normal driving conditions.

“[P]erhaps 12 examples could provide a sufficient factual assertion in the proper case. But here, not only is it a very small number relative to the ‘hundreds of thousands’ of vehicles that supposedly have this defect,” but plaintiffs also failed to offer context about how many complaints are normal. “Just as unverified internet reports could not give consumers objective knowledge of Limp Mode, they are not sufficient to impute to Ford Management actual knowledge of Limp Mode occurring on public roads.”

Class certification: Did individual issues about each class member’s knowledge of the truth about his car “swamp” the common questions about Ford’s conduct” Plaintiffs argued, first, that materiality, reliance, and causation can be proven on a class wide basis with reference to an objective consumer standard. Second, the depositions of named plaintiffs didn’t show that they understood that the lack of coolers specifically meant the Base and Tech GT350’s were incapable of Track Days, or that they knew the truth from Ford itself. The court agreed with the second argument. “[S]urely a reasonable consumer cannot have been expected to search the Internet for unverified reports of problems she did not know existed.” Although plaintiffs may have had multiple reasons for buying their cars, Ford’s representations were uniform. “In this particular predominance inquiry, the Court finds that the more relevant considerations are Ford’s uniform course of conduct and the dearth of evidence pointing to individual reliance issues that stem from Ford’s communications.”

There might be individual affirmative defenses, but “[t]he general rule, regularly repeated by courts in many circuits, is that courts traditionally have been reluctant to deny class action status under Rule 23(b)(3) simply because affirmative defenses may be available against individual members.”

Damage theories: Although plaintiffs calculated their damages in two different ways (benefit of the bargain and fixing the cars), that didn’t violate Comcast. “[A]ntitrust law requires a plaintiff to specifically explain which effect of a defendant’s conduct makes the conduct unlawful and calculate the damages attributable only to that isolated impact. The fraud laws at issue in this class action impose no such requirement.” The alleged harm was that plaintiffs overpaid for their cars. “On the other hand, … the harm suffered by antitrust plaintiffs by each different antitrust impact is legally separable and distinct and requires a damages calculation tied to its theory of liability.” So, because plaintiffs’ damage model calculated how much a class member “overpaid” for his vehicle due to Ford’s misrepresentations and omissions, it was “the translation of the legal theory of the harmful event into an analysis of the economic impact of that event,” and thus satisfied Rule 23(b). Either version of damages could be applied classwide. Thus, the court certified state consumer protection classes where state law allowed class-wide proof to win a presumption of reliance and causation.

However, unjust enrichment couldn’t be evaluated classwide.

Certification: statutory and common law fraud classes in California, Florida, Illinois, New York, and Washington; statutory fraud classes in Missouri and Texas; common law fraud classes in Oregon and Tennessee; and implied warranty and Magnuson-Moss classes in California and Texas.

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