Monday, January 19, 2009

Hybrid Auto Fuel Efficiency Ad Claims Could Be Deceptive

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A purchaser of a 2004 Honda Civic Hybrid automobile could go to trial on his claims that Honda's advertising was deceptive or misleading under California law, a California appellate court has ruled.

The purchaser’s claims were based on statements in a Honda brochure suggesting that the vehicle could be driven in the same manner as a conventional vehicle and achieve superior fuel economy matching EPA estimates. The advertising allegedly violated California's Consumer Legal Remedies Act and Unfair Competition Law.

Fuel Savings Claims

The Honda brochure stated that a purchaser could “Just drive the Hybrid like you would a conventional car and save on fuel bills” and that a customer need not do “anything special” in order to get “terrific gas mileage.” The purchaser claimed that the vehicle achieved only about half of the Environmental Protection Agency's fuel economy rating of 47 miles per gallon for city driving and 48 miles per gallon for highway driving.

The purchaser offered evidence that a Honda representative told him that the “mileage tests used were developed over 30 years ago and do not reflect real driving situations, let alone driving habits of consumers in the modern day.”

The purchaser added that a Honda representative admitted that Hybrid vehicles are more dramatically affected by outside influences such as air conditioning, driving habits, windows up/down, and vehicle load than normal combustion engines, and that short trips penalize hybrid efficiency more so than regular cars.

Honda contended that the statement, “Just drive the Hybrid like you would a conventional car, while saving on fuel bills,” when read in the context of the brochure's “frequently asked questions” section, simply referred to the fact that the Hybrid did not have to be plugged in.

However, it was unclear why the issue of plugging in a vehicle would have anything to do with how one drives the vehicle, since plugging in a vehicle in order to provide it power would presumably occur while the car was parked and not being driven. It also was unclear how the “saving on fuel bills” statement was responsive to, or even related to, the posed question, “I never have to plug it in, right?”

Reasonable Consumer

A reasonable person could understand Honda to be making a claim about the benefits of the vehicle beyond the discussion of whether the car must be plugged in, the court determined. The statement was, at best, ambiguous, and could reasonably be read as stating that one could receive the fuel economy benefits of a hybrid vehicle while driving the vehicle in the same manner as one would drive a conventional vehicle.

The purchaser maintained that he relied on Honda's representations because he would not have purchased the vehicle had he known that those representations were false. The purchaser's evidence was sufficient to raise triable issues of material fact, according to the court.

Federal Preemption

The purchaser's claims were not expressly or impliedly preempted by the federal Energy Policy and Conservation Act (EPCA) or the federal requirements that automobile manufacturers display on new vehicles “Monroney Stickers” reciting fuel use estimates, the court added.

The federal statute expressly preempted states from imposing requirements for fuel-economy disclosures not identical to the federal rules.

Contrary to Honda's characterization of the purchaser's state law claims, the purchaser was not claiming that disclosing the EPA mileage estimates was, by itself, deceptive, the court found. Rather, the purchaser maintained that Honda had voluntarily made additional assertions—beyond the disclosure of the mileage estimates—that were untrue or misleading, and that federal law did not require, or even address, those additional assertions.

In Altria Group, Inc. v. Good, CCH Advertising Law Guide ¶63,232 (2008), the U.S. Supreme Court held that the federal law did not preempt claims that tobacco company Philip Morris violated the Maine Unfair Trade Practices Act by advertising and promoting “light” cigarettes.

Honda's argument of express failed preemption failed because the EPCA, like the federal Cigarette Labeling and Advertising Act addressed in Altria Group, did not encompass a general duty not to make fraudulent or misleading statements.

State regulation of false advertising and unfair business practices might further the goals of the EPCA, as was observed in True v. American Honda Motor Co., CCH Advertising Law Guide ¶62,725 (CD Cal. 2007). Honda's implied preemption argument that California's regulation of deceptive advertising somehow acted as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress was rejected.

The January 12 decision in Paduano v. American Honda Motor Co., Inc. will be reported at CCH Advertising Law Guide ¶63,233 and at CCH State Unfair Trade Practices Law ¶31,733.

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