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SKELTON v. GENERAL MOTORS CORP.

October 1, 1980

ARLIE GLEN SKELTON, JR., C.G. HASKINS, EUGENE C. COLEMAN ET AL., PLAINTIFFS,
v.
GENERAL MOTORS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Moran, District Judge.

  MEMORANDUM AND ORDER

Plaintiffs, purchasers of General Motors Corporation (GM) automobiles, seek relief under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (Magnuson-Moss Act or Act), 15 U.S.C. § 2301 et seq., because of the alleged undisclosed substitution of THM 200 (M29) transmissions for THM 350 (M38) transmissions in various 1976 through 1979 models of GM automobiles. Plaintiffs claim that the THM 200 transmission is inferior to the THM 350 and that the substitution has caused violations of written warranty, implied warranty and deceptive warranty provisions of the Act. GM has moved to dismiss the second amended complaint for failure to state a claim upon which relief can be granted.*fn1

The complaint alleges that GM has disseminated "brochures, manuals, consumer advertising and other forms of communications" which "expressly represented and warranted" that certain GM automobiles contained "THM 350 . . . transmissions, or transmissions of similar quality and performance . . . and that they would meet a specified level of performance." Through such communications, GM "implied, warranted and represented" that those models contained such transmissions. Plaintiffs in Count I charge violation of the written warranty and, apparently, implied warranty provisions of the Magnuson-Moss Act. In Count II, plaintiffs claim that the substitution is actionable as a deceptive warranty within the meaning of § 110(c)(2) of the Act, 15 U.S.C. § 2310(c)(2).

The court concludes that there is no private right of action under § 110(c)(2) and that the complaint does not state a claim for breach of an implied warranty. Count I, however, liberally construed, does state a claim for violation of written warranties under § 110(d) of the Act. Federal jurisdiction requires a sales transaction which includes a written warranty within the express statutory terms, but the representations made to purchasers in conjunction with such a warranty are actionable under federal law. The reach of federal law is not to representations made in the market generally but to representations made to purchasers of consumer goods in conjunction with a sales transaction of which the furnishing of a written warranty, as statutorily defined, is an integral part. Accordingly, the motion is denied as to Count I, and Count II is dismissed.

A literal reading of the Magnuson-Moss Act is only a departure point for giving meaningful content to the statute which has been variously described as "disappointing",*fn2 "opaque",*fn3 and a product of "poor drafting".*fn4 A review of the legislative history gives but limited solace. That review is the legal equivalent of an archeological dig. Various consumer warranty bills were pending before the House and Senate for four years, during which each body defined, discarded, reintroduced and redefined concepts which in some fashion or another are related to the enacted legislation. Some provisions in the Act are vestigial reminders of concepts buried but not totally forgotten during the on-going legislative process. Both proponents and opponents of an expansive interpretation have cited compelling, to them, legislative history only dimly related to the language which finally emerged as law.

Any consideration of the questions presented must begin, then, with the Supreme Court's admonition that "[s]tatutory interpretation requires more than concentration upon isolated words; rather, consideration must be given to the total corpus of pertinent law and the policies that inspired ostensibly inconsistent provisions." Boys Market, Inc. v. Retail Clerks Union, 398 U.S. 235, 250, 90 S.Ct. 1583, 1592, 26 L.Ed.2d 199 (1970).*fn5

I. Written Warranties

The genesis of the Act was Congressional concern about the adequacy of warranty protection for automobile purchasers, documented by FTC investigations in 1968 and 1970. See H.Rep. No. 93-1107, reprinted in 1974 U.S.Code Cong. and Admin.News, at pp. 7708-9. The hypothetical consumer had purchased a defective automobile, possessed an impressive warranty document, and had but little hope of real relief. That concern led to a legislative effort to provide meaningful warranty protection for consumers in a mass marketing economy. A consistent concept in the Act and its legislative history, akin to that in the securities laws, is that full disclosure will result in informed choices, or at least that the reach of federal action should mandate full disclosure so as to permit informed choice. See Eddy, Effects of the Magnuson-Moss Act upon Consumer Product Warranties, 55 North Car.L. Rev. 835, 874 (1977). The history of the Act was, if not shaped, profoundly influenced by the inadequacies of the familiar formal consumer warranty, after described as "the paper with the filigree border."*fn6

Equally apparent from the Act and its legislative history is the Congressional reluctance to sanction a sweeping preemption of the law of commercial transactions traditionally the preserve of each of the fifty states but in a sense federalized by the widespread enactment of the Uniform Commercial Code. The Magnuson-Moss Act is not a federal "truth in advertising" law. It has as its essential purpose truth in express warranty disclosure, but both in language and legislative history it recognizes that what is in the paper with the filigree border cannot be wholly divorced from what has influenced the consumer in a mass marketing economy. What then is now a federal claim and what is the traditional state lawsuit based upon the Uniform Commercial Code?

The key to understanding the scope and effect of the Magnuson-Moss Act is interpreting the phrase "written warranty", which appears at several different places in the statute with somewhat different meanings. The Act initially defines a written warranty as:

    (A) any written affirmation of fact or written
  promise made in connection with the sale of a
  consumer product by a supplier to a buyer which
  relates to the nature of the material or workmanship
  and affirms or promises that such material or
  workmanship is defect free or will meet a specified
  level of performance over a specified period of time,
  or
    (B) any undertaking in writing in connection with
  the sale by a supplier of a consumer product to
  refund, repair, replace, or take other remedial
  action with respect to such product in the event that
  such product fails to meet the specifications set
  forth in the undertaking, which written affirmation,
  promise or undertaking becomes part of the basis of
  the bargain between a supplier and a buyer for
  purposes other than resale of such product.

15 U.S.C. § 2301(6). As with the Uniform Commercial Code,*fn7 a written warranty under this definition is a specific type of "affirmation", "promise", or "undertaking", though the Act's definition is substantially narrower than the Code's.

A written description of the size or type of a transmission does not constitute a written warranty as defined by this section. The plaintiffs attempt to fit such a promise under subsection (A) of this section, contending that it "relates to the nature of the material or workmanship and affirms or promises that such material or workmanship . . . will meet a specified level of performance." However, the plaintiffs ignore the requirement that the promise of a "specified level of performance" must be "over a specified period of time." To constitute a written warranty under this provision a warranty must be limited in duration; a representation, for example, that a transmission will perform adequately for three years would constitute a written warranty,*fn8 but not simply a statement that an automobile contains a certain type of transmission.

The Federal Trade Commission supports this construction:

  The Act imposes specified duties and liabilities on
  suppliers who offer written warranties on consumer
  products. Certain representations, such as energy
  efficiency ratings for electrical appliances, care
  labeling of wearing apparel, and other product
  information disclosures may be express warranties
  under the Uniform Commercial Code. However, these
  disclosures alone are not written warranties under
  the Act. Section 101(6) provides

  that a written affirmation of fact or a written
  promise of a specified level of performance must
  relate to a specified period of time in order to be
  considered a ...

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