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MPG Claims Becoming Hot Issue

8/27/14 | Topic: Warranty

Automakers’ stated miles per gallon (MPG) estimates are drawing criticism from consumer groups and the plaintiff’s bar, as well as increased attention from the federal regulatory agencies overseeing such estimates.  The MPG ratings, which are based on guidelines and testing established by the Environmental Protection Agency (EPA), are widely used in car advertisements, and are included in the window stickers for new vehicles.  Dealership salespeople typically tout the estimated MPG to potential consumers as well.  Two recent lawsuits highlight the contentious issues involved in MPG claims.  It is also clear that the two governmental regulatory agencies tasked with overseeing this area, the EPA and the Federal Trade Commission (FTC), seem to be ratcheting up their standards and requirements.    

On the litigation front, recently, the Colorado district court largely dismissed a proposed class action accusing Ford Motor Company of misleading consumers about the fuel efficiency of some of its hybrid vehicles, finding that many of Ford’s allegedly false advertisements and claims amounted to no more than “non-actionable puffery.”  (Sanchez v. Ford Motor Co., No. 13-cv-01924-RBJ, 2014 U.S. Dist. LEXIS 73195, at *15 (D. Colo. May 29, 2014).)  The court also largely adopted Ford’s argument that MPG claims are preempted by federal law, stating, “FTC guidelines explain that the use of ‘EPA estimate’ is sufficient disclosure.”  (Id. at *12 (citing 16 C.F.R. § 259.2(a)(2), n.5).)

In addition, Hyundai and Kia are still involved in an MDL action over MPG issues, though the matter is close to settlement.  Plaintiffs in the MDL matter are alleging the automakers overstated the fuel efficiency of more than 900,000 vehicles.  The lawsuits came in the wake of the companies’ joint announcement in November 2012 that they would begin restating the mileage estimates for several vehicle models because they had deviated from EPA fuel economy testing protocols when producing previous estimates.  (In re Hyundai & Kia Fuel Econ. Litig., MDL No. 2424, 2:13-ml-02424-GW-FFM (C.D. Cal.).)

On the regulatory front, in July, the EPA said it is considering a new regulatory program to require in-use gas mileage auditing for all automakers, following complaints about misleading fuel economy estimates.  However, the announcement made it clear that the EPA is just in the beginning stages of developing such a program.

For its part, the FTC announced in May that it is inviting comments on whether to change its fuel economy advertising rules to advise that automakers state the mileage their vehicles get both in the city and on the highway (rather than just the highway), in an effort to better inform consumers.   

Given the ever-rising price of gasoline as well as the increasing popularity of hybrid vehicles, MPG litigation is likely to increase in the foreseeable future.