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Skelton v. General Motors Corp.

decided: September 28, 1981.

ARLIE GLEN SKELTON, JR., ET AL., PLAINTIFFS-APPELLEES,
v.
GENERAL MOTORS CORPORATION, DEFENDANT-APPELLANT .



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 79-C-1243, James B. Moran, Judge .

Before Swygert, Senior Circuit Judge, and Wood and Cudahy, Circuit Judges.

Author: Cudahy

Section 110(d) of Title I of the Magnuson-Moss Warranty-Federal Trade Commission Improvements Act ("Magnuson-Moss" or the "Act") creates a federal private cause of action for consumers damaged by the failure of a warrantor "to comply with any obligation under ... a written warranty." 15 U.S.C. § 2310(d)(1) (1976). The issue on this interlocutory appeal is whether a "written warranty" actionable under § 110(d) is limited to the particular promises, undertakings or affirmations of fact expressly defined as "written warranties" by Congress in the Act. The district court held that § 110(d) provides a federal cause of action not merely for breach of a "written warranty" as defined in the Act but also for breach of "all written promises presented in connection with the sale of a formally warranted product." 500 F. Supp. 1181, 1190 (N.D.Ill.1980). We reverse.

I.

Plaintiffs, purchasers of automobiles manufactured by defendant General Motors Corporation ("GM"), brought this action as a nationwide class action on behalf of all purchasers of GM automobiles manufactured from 1976 through 1979. In Count I of their amended complaint, plaintiffs allege that GM, through its "brochures, manuals, consumer advertising and other forms of communications to the public generally and to members of plaintiffs' class specifically," warranted and represented that 1976 through 1979 GM automobiles contained THM 350 (M38) transmissions, or "transmissions of similar quality and performance.... and that (such transmissions) would meet a specified level of performance." Plaintiffs charge in Count I that, contrary to these warranties and representations, GM substituted inferior THM 200 (M29) transmissions for THM 350 (M38) transmissions in GM automobiles manufactured from 1976 through 1979. This undisclosed substitution is alleged to constitute a violation of written and implied warranties under § 110(d) of Magnuson-Moss. In Count II, plaintiffs claim that the substitution is actionable as a "deceptive warranty" under § 110(c)(2) of the Act, 15 U.S.C. § 2310(c)(2) (1976).

General Motors moved to dismiss both counts of plaintiffs' complaint for failure to state a claim upon which relief could be granted. On October 1, 1980, the district court granted this motion with respect to the "implied warranty" portion of Count I and the "deceptive warranty" claim in Count II, but denied GM's motion to dismiss the "written warranty" claim in Count I. 500 F. Supp. 1181 (N.D.Ill.1980). GM's interlocutory appeal from the district court's refusal to dismiss the "written warranty" claim was certified by the district court on October 31, 1980 and accepted by this court on December 4, 1980. Plaintiffs did not take timely interlocutory appeals from the district court's determinations against them with respect to the "implied warranty" and "deceptive warranty" claims.*fn1

II.

Magnuson-Moss is, in the main, a remedial statute designed to protect consumers from deceptive warranty practices. Its draftsmen believed that consumer product warranties often were too complex to be understood, too varied to allow meaningful comparisons and too restricted to provide meaningful warranty protection. See S.Rep.No.93-151, 93d Cong., 1st Sess. 6-8 (1973); H.R.Rep.No.93-1107, 93d Cong., 2d Sess. 22-29, reprinted in (1974) U.S.Code Cong. & Ad.News 7702, 7705-11.*fn2 The Act's draftsmen sought to remedy these perceived ills by imposing extensive disclosure requirements and minimum content standards on particular types of written consumer product warranties. And, to promote enforcement of these warranties, the draftsmen devised a detailed remedial apparatus, which includes optional informal dispute settlement procedures as well as private and governmental judicial actions.

Although Magnuson-Moss does not require any manufacturer or seller to extend a warranty with its product,*fn3 any "written warranty" offered with a consumer product is subject to the Act's regulatory requirements. The term "written warranty" is defined "for purposes of (the Act)" in § 101(6) which reads:

(6) The term written warranty means

(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) (1976).

Sections 102 through 109 of the Act set forth the content and disclosure rules applicable to all "written warranties." Section 102 provides that "any warrantor warranting a consumer product to a consumer by means of a written warranty shall, to the extent required by the rules of the (Federal Trade) Commission, fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty." 15 U.S.C. § 2302(a) (1976). Pursuant to this provision, the FTC has, by regulation, required that warrantors made detailed disclosures of information necessary to allow consumers to understand and enforce written warranties.*fn4 The FTC regulations also require, pursuant to § 102(b), that sellers of consumer products with written warranties make available to the consumer the text of such warranties prior to sale. 16 C.F.R. § 702.3 (1980).

Under § 103, warrantors must conspicuously designate written warranties as either "full" or "limited." If a warranty is designated as "full," § 104 provides that the warrantor must (1) remedy defects or malfunctions without charge and within a reasonable period of time; (2) make no limitation on the duration of any implied warranty on the product; (3) provide for no exclusion of limitation of consequential damages unless conspicuously stated, and (4) refund or replace the product if, ...


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