721
Chapter 45
Consumer Law
Case 45.1
512 F.3d 858, 2008-1 Trade Cases P 75,991
United States Court of Appeals,Seventh Circuit.
FEDERALTRADECOMMISSION, Plaintiff-Appellee,
v.
QT, INC., Q-Ray Company, Bio-Metal, Inc., and Que Te Park, Defendants-Appellants.
No. 07–1662.
Argued Oct. 31, 2007.
Decided Jan. 3, 2008.
EASTERBROOK, Chief Judge.
WIRED Magazine recently put the Q-Ray Ionized Bracelet on its list of the top ten Snake-Oil Gadgets. See http:// blog. wired. com/ gadgets/
2007/ 11/ 10– awesome- gadg. html.
The “Gold Deluxe” Q-Ray Ionized Bracelet
The Federal Trade Commission has an even less honorable title for the bracelet’s promotional campaign: fraud. In this action under 15 U.S.C.
§§ 45(a), 52, 53, a magistrate judge, presiding by the parties’ consent, concluded after a bench trial that the bracelet’s promotion has been
thoroughly dishonest. The court enjoined the promotional claims and required defendants to disgorge some $16 million (plus interest) for the
FTC to distribute to consumers who have been taken in. 448 F.Supp.2d 908 (N.D.Ill.2006), modified in part by 472 F.Supp.2d 990 (N.D.Ill.2007).
According to the district court’s findings, almost everything that defendants have said about the bracelet is false. Here are some highlights:
• Defendants promoted the bracelet as a miraculous cure for chronic pain, but it has no therapeutic effect.
• Defendants told consumers that claims of “immediate, significant or complete pain relief” had been “test–proven”; they hadn’t.
• The bracelet does not emit “Q–Rays” (there are no such things) and is not ionized (the bracelet is an electric conductor, and any net
charge dissipates swiftly). The bracelet’s chief promoter chose these labels because they are simple and easily remembered-and because
722 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
cycle specific to each individual wearer” so that only the bracelet’s original wearer can experience pain relief is designed to increase sales by
eliminating the second-hand market and “explaining” the otherwise–embarrassing fact that the buyer’s friends and neighbors can’t perceive
any effect.
• Even statements about the bracelet’s physical composition are false. It is sold in “gold” and “silver” varieties but is made of brass.
The magistrate judge did not commit a clear error, or abuse his discretion, in concluding that the defendants set out to bilk unsophisticated
persons who found themselves in pain from arthritis and other chronic conditions.
[1] Defendants maintain that the magistrate judge subjected their statements to an excessively rigorous standard of proof. Some passages in
the opinion could be read to imply that any statement about a product’s therapeutic effects must be deemed false unless the claim has been
verified in a placebo-controlled, double-blind study: that is, a study in which some persons are given the product whose effects are being
investigated while others are given a placebo (with the allocation made at random), and neither the person who distributes the product nor
the person who measures the effects knows which received the real product. Such studies are expensive, not only because of the need for
placebos and keeping the experimenters in the dark, but also because they require large numbers of participants to achieve statistically
significant results. Defendants observe that requiring vendors to bear such heavy costs may keep useful products off the market (this has been
a problem for drugs that are subject to the FDA’s testing protocols) and prevent vendors from making truthful statements that will help
consumers locate products that will do them good.
[2] Nothing in the Federal Trade Commission Act, the foundation of this litigation, requires placebo-controlled, double-blind studies. The Act
forbids false and misleading statements, and a statement that is plausible but has not been tested in the most reliable way cannot be
condemned out of hand. The burden is on the Commission to prove that the statements are false. (This is one way in which the Federal Trade
Commission Act differs from the Food and Drug Act.) Think about the seller of an adhesive bandage treated with a disinfectant such as iodine.
The seller does not need to conduct tests before asserting that this product reduces the risk of infection from cuts. The bandage keeps foreign
materials out of the cuts and kills some bacteria. It may be debatable how much the risk of infection falls, but the direction of the effect would
be known, and the claim could not be condemned as false. Placebo-controlled, double-blind testing is not a legal requirement for consumer
products.
[3] To this defendants respond that one study shows that the Q-Ray Ionized Bracelet does reduce pain. This study, which the district court’s
opinion describes in detail, compared the effects of “active” and “inactive” bracelets (defendants told the experimenter which was which),
with the “inactive” bracelet serving as a control. The study found that both “active” and “inactive” bracelets had a modest-and identical-effect
on patients’ reported levels of pain. In other words, the Q-Ray Ionized Bracelet exhibits the placebo effect. Like a sugar pill, it alleviates
symptoms even though there is no apparent medical reason. The placebo effect is well established. See, e.g., Anne Harrington, The Placebo
Effect: An Interdisciplinary Exploration (1999); Asbjorn Hrobjartsson & Peter C. Gotzsche, Is the Placebo Powerless? An Analysis of Clinical
Trials Comparing Placebo with No Treatment, 344 New England J. Medicine 1594 (2001); Ted Kaptchuk, Intentional Ignorance: A History of
Blind Assessment and Placebo Controls in Medicine, 72 Bulletin of the History of Medicine 389 (1998). Defendants insist that the placebo
effect vindicates their claims, even though they are false-indeed, especially because they are false, as the placebo effect depends on deceit.
Tell the patient that the pill contains nothing but sugar, and there is no pain relief; tell him (falsely) that it contains a powerful analgesic, and
the perceived level of pain falls. A product that confers this benefit cannot be excluded from the market, defendants insist, just because they
told the lies necessary to bring the effect about.
CHAPTER 45: CONSUMER LAW 723
Medicine aims to do better than the placebo effect, which any medieval physician could achieve by draining off a little of the patient’s blood. If
no one knows how to cure or ameliorate a given condition, then a placebo is the best thing going. Far better a placebo that causes no harm
(the Q-Ray Ionized Bracelet is inert) than the sort of nostrums peddled from the back of a wagon 100 years ago and based on alcohol, opium,
and wormwood. But if a condition responds to treatment, then selling a placebo as if it had therapeutic effect directly injures the consumer.
See Kraft, Inc. v. FTC, 970 F.2d 311, 314 (7th Cir.1992) (a statement violates the FTC Act “if it is likely to mislead consumers, acting reasonably
under the circumstances, in a material respect”).
Physicians know how to treat pain. Why pay $200 for a Q-Ray Ionized Bracelet when you can get relief from an aspirin tablet that costs 1¢?
Some painful conditions do not respond to analgesics (or the stronger drugs in the pharmacopeia) or to surgery, but it does not follow that a
placebo at any price is better. Deceit such as the tall tales that defendants told about the Q-Ray Ionized Bracelet will lead some consumers to
avoid treatments that cost less and do more; the lies will lead others to pay too much for pain relief or otherwise interfere with the matching
about their profits. True, the FTC compiled balance sheets showing profits running in the millions every year. These should not be considered,
defendants insist, because when Que Te Park (defendants’ principal investor and CEO) testified about the subject, he was asked only whether
he could “see” the enterprise’s net income (he conceded that he could), not whether the figures*864 are correct, and the FTC’s lawyer then
forgot to offer the balance sheets themselves as evidence.
This is too clever by half. The FTC made estimates of profits from the Q-Ray Ionized Bracelet business and gave defendants an opportunity to
respond. They chose not to do so. Park’s noncommittal answers avoided any risk of prosecution for perjury but did not meet the FTC’s prima
facie showing. The magistrate judge was entitled to treat the evasion as an admission that the FTC’s computation is in the ballpark. A
monetary award often depends on estimation, for defendants may not keep (or may conceal) the data required to make an exact calculation.
Defendants’ business was a profitable one; that much, at least, they concede. (It is so profitable that they continue to carry it on despite the
Although defendants complain that the magistrate judge failed to separate ill-got gains from legitimate profits, they offer no reason to think
that any of their profits are “legitimate.” Defendants’ sole business is the sale of Q-Ray products.
[5] On top of paying $16 million (plus interest) into a fund for distribution to all of their customers, defendants must refund the full purchase
price of some bracelets purchased over the Internet. Defendants’ infomercials promised buyers that the purchase price would be refunded
any time during 30 days after the sale if the buyers were not satisfied with their bracelets. Defendants honored that promise for bracelets
purchased by telephone but not for bracelets purchased from their web sites. Internet purchasers were allowed only 10 days to return their
Case 45.2
Cal.App. 4 Dist.,2009.
Paduano v. American Honda Motor Co., Inc.
169 Cal.App.4th 1453, 88 Cal.Rptr.3d 90, 09 Cal. Daily Op. Serv. 421, 2009 Daily Journal D.A.R. 449
Court of Appeal, Fourth District, Division 1, California.
Gaetano PADUANO, Plaintiff and Appellant,
v.
AMERICAN HONDA MOTOR COMPANY, INC., Defendant and Respondent.
No. D050112.
Jan. 12, 2009.
Rehearing Denied Feb. 2, 2009.
AARON, J.
I.
INTRODUCTION
Appellant Gaetano Paduano appeals from a judgment of the trial court in favor of defendant American Honda Motor Company, Inc. (Honda).
Paduano purchased a new 2004 Honda Civic Hybrid in June 2004, and subsequently became displeased with the fuel efficiency of the vehicle.
Paduano was achieving approximately half of the Environmental Protection Agency’s (EPA) fuel economy estimate that was disclosed on the
federally mandated new car label. After Paduano was informed by a service employee at a Honda dealership that driving conditions affect the
fuel efficiency of hybrid vehicles more than that of conventional vehicles, and that his Civic Hybrid could achieve higher fuel efficiency only if
he significantly altered his driving habits, Paduano requested that Honda repurchase the vehicle from him. When Honda refused, Paduano
filed this action in which he alleges one federal and two state law causes of action for breach of warranty, and two state law causes of action
for deceptive advertising.
the portion of the trial court’s judgment pertaining to those claims. However, with respect to Paduano’s claims of deceptive advertising, we
conclude that summary adjudication was not appropriate. Paduano raises claims that are not preempted by federal law, and there remain
triable issues of material fact as to whether certain of Honda’s advertising claims were false and/or misleading. We therefore reverse the trial
court’s judgment as to Paduano’s state law causes of action for deceptive advertising.
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual background
On June 15, 2004, Paduano purchased a 2004 Honda Civic Hybrid that had a continuously variable transmission.FN1 The federally mandated
label FN2 that was on Paduano’s vehicle at the time he purchased it showed that the Civic Hybrid with continuously variable transmission had
FN3. The relevant statements in Honda’s brochure are described in more detail in section III.C.2.b., post.
Paduano drove the vehicle for approximately a year and became increasingly dissatisfied with his vehicle’s fuel economy performance. During
this time, the vehicle achieved less than half of the EPA estimated fuel economy level. Paduano took the vehicle to several Honda dealerships
FN4. At his deposition, Paduano appeared to challenge the accuracy of the Honda employee’s mileage calculation based on this road
test. Paduano was not present in the vehicle during the road test, but said that he had independently reset the vehicle’s trip meter
prior to the road test. According to Paduano, the display in the vehicle indicated that the vehicle had attained only 37.8 mpg during
the road test.
Paduano called Honda’s customer service telephone line and was informed that Honda had received “ ‘[a] high number of complaints about
customers not receiving the posted and advertised mileage.’ ” (Internal quotations and formatting omitted.) The Honda representative also
told Paduano that both Honda and Toyota have “ ‘[a]pproached’ ”the “ ‘EPA to change [the] mileage [rating]‘ ” to be more in line with the
mileage drivers were achieving in their hybrid vehicles.
In a letter dated May 11, 2005, Paduano requested that Honda repurchase his vehicle, and sent notice as required under the Consumer Legal
Remedies Act (CLRA) in May 2005. In his letter, Paduano stated that he had “ consistently gotten 23 to 30 miles per gallon” from his vehicle.
Honda declined Paduano’s repurchase demand in a letter dated May 25, 2005.
On May 12, 2006, Honda moved for summary judgment, arguing both that federal law preempts all of Paduano’s claims, and that Paduano’s
claims must fail because there had been no breach of warranty or deceptive advertising, as a matter of law.
On June 8, 2006, Honda filed a motion for leave to amend its answer to allege three additional affirmative defenses.FN5 The three affirmative
defenses related to Honda’s assertion that Paduano’s causes of action were preempted by federal law. Honda argued that it should be
permitted to plead these new affirmative defenses because the defenses clarified Honda’s original third affirmative defense in which it
asserted that Paduano failed to state a cause of action. On July 14, 2006, the trial court granted Honda’s motion for leave to amend its
answer. On the same day, Paduano filed his opposition to Honda’s motion for summary judgment.
FN5. Honda did not amend its answer for more than a year after the complaint was filed.
The trial court tentatively ruled in favor of Honda at the July 28 hearing on Honda’s motion for summary judgment. Paduano sought a
continuance of the hearing. In early September, Paduano filed a supplemental opposition to Honda’s motion for summary judgment. Honda
filed a supplemental reply.
statements about the fuel economy of the Civic Hybrid were accurate and not misleading.”
We conclude that the trial court was correct in granting summary adjudication in favor of Honda on Paduano’s warranty claims. However, we
disagree with Honda’s contention that federal law entirely preempts Paduano’s misrepresentation claims and/or that the statements Honda
made in its advertising about the Civic Hybrid’s fuel economy are, as a matter of law, accurate and not misleading. The federal law that
regulates fuel economy estimates and labels does not preempt every lawsuit that challenges any statement an automobile manufacturer
that the material fact was true [citation], or the defendant must establish that an element of the claim cannot be established, by presenting
evidence that the plaintiff ‘does not possess and cannot reasonably obtain, needed evidence.’ [Citation.]” (Kahn, supra, 31 Cal.4th at p. 1003,
4 Cal.Rptr.3d 103, 75 P.3d 30.)
On appeal, the reviewing court makes “ ‘an independent assessment of the correctness of the trial court’s ruling, applying the same legal
standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to
(1989) 216 Cal.App.3d 1071, 1074, 265 Cal.Rptr. 317.)
B. The federal framework relating to fuel economy estimates
Honda contends that federal law preempts all of Paduano’s claims, either expressly or by way of conflict preemption principles. According to
Honda, certain provisions of the EPCA that regulate disclosure of fuel estimates preclude Paduano’s causes of action.
Chapter 329 of title 49 of the United States Code (49 U.S.C. § 32901 et seq.), which was enacted as part of the EPCA, in conjunction with
regulations promulgated by the EPA and the Federal Trade Commission (FTC), establishes a federal regulatory scheme for measuring and
disclosing automobile fuel economy ratings. One of the purposes of the statutory scheme is to assist consumers in making comparisons of the
fuel economy of new vehicles.
Title 49 United States Code section 32904 establishes that the “Administrator of the Environmental Protection agency shall calculate the
average fuel economy of a manufacturer.” Section 32904(c) sets forth the “[t]esting and calculation procedures,” as follows:
“The Administrator shall measure fuel economy for each model and calculate average fuel economy for a manufacturer under testing and
calculation procedures prescribed by the Administrator. However, except under section 32908 of this title, the Administrator shall use the
same procedures for passenger automobiles the Administrator used for model year 1975 (weighted 55 percent urban cycle and 45 percent
highway cycle), or procedures that give comparable results. A measurement of fuel economy or a calculation of average fuel economy
FN6. Another section of the United States Code requires that the label be “affix[ed] to the windshield, or side window” of each new
vehicle. (15 U.S.C. § 1232.) That provision also requires disclosure of additional information, including the final assembly point, the
“(B) the estimated annual cost of operating the automobile.
“(C) the range of fuel economy of comparable automobiles of all manufacturers.
“(D) a statement that a booklet is available from the dealer to assist in making a comparison of fuel economy of other automobiles
manufactured by all manufacturers in that model year.
“(E) the amount of the automobile fuel efficiency tax imposed on the sale of the automobile under section 4064 of the Internal Revenue
Code of 1986 (26 U.S.C. 4064).
“(F) other information required or authorized by the Administrator that is related to the information required by clauses (A)-(D) of this
paragraph.”
In addition, the EPA must “prepare the booklet referred to in subsection (b)(1)(D) of [the same] section,” which is to contain, among other
things, “information on fuel economy and estimated annual fuel costs of operating automobiles manufactured in each model year….” (49
U.S.C. § 32908(c)(1)(B).)
C. Analysis
1. Paduano’s warranty claims fail
In his first and second causes of action, Paduano asserts that his vehicle developed certain defects that caused the vehicle to achieve reduced
fuel efficiency, and that Honda failed to service or repair his vehicle in accordance with the warranty Honda provided, in violation of the Song–
Beverly Act (Civ.Code, § 1793.2, subd. (d)). In his third cause of action, Paduano repeats the allegation that his vehicle developed these
defects, and alleges that Honda failed to repair the defects or malfunctions and failed to give Paduano a refund or to replace his vehicle, in
violation of Moss-Magnuson (15 U.S.C. § 2304(a)(4)). The defects Paduano identifies in his complaint are “defects with the engine, defects
with the fuel system, defects causing the vehicle to get reduced mileage.” Paduano does not clearly identify what mileage he claims Honda
warranted he could get from his Civic Hybrid. However, based on his arguments, we deduce that Paduano is claiming that Honda warranted
that his vehicle would achieve the EPA estimates or a level close to those estimates.
Under Magnuson-Moss, “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
728 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
[3] To the extent that Paduano contends that any particular mileage is warranted under Honda’s general “bumper to bumper” new car
warranty because, as he asserts, the warranty does not otherwise exclude mileage from its coverage, this contention also fails. Honda
warrants that it will “repair or replace any part that is defective in material or workmanship under normal use.” Honda established that there
is no evidence that Paduano’s vehicle suffers from any defect related to the mileage it attains, since non of the testing of Paduano’s vehicle
identified any problem with any parts in Paduano’s vehicle. Although Paduano asserts that “the mileage on his vehicle is so low that there
[must be] something wrong with it,” the record offers no evidence of the existence of a defect in his vehicle that is causing it to achieve low
mileage.FN8 By failing to present any evidence that would suggest that Paduano’s relatively low gas mileage is the result of a mechanical defect
in his vehicle, Paduano cannot establish that there is a triable issue of material fact with regard to his claims that Honda has not satisfied the
provisions of its warranty on the Civic Hybrid with regard to gas mileage.FN9 We therefore affirm the trial court’s summary adjudication of
Paduano’s warranty claims in Honda’s favor.
FN8. There is evidence that it is not a defect in Paduano’s vehicle that is causing it to attain relatively low gas mileage, but rather,
FN9. Paduano’s mention of other Civic Hybrid owners’ complaints as to the fuel economy of their vehicles suggests that Paduano’s
2. There remain triable issues of fact with regard to Paduano’s claims under the CLRA and UCL
a. The CLRA and UCL legislative schemes
The CLRA prohibits the use of “unfair methods of competition and unfair or deceptive acts or practices” in sale or lease transactions.
(Civ.Code, § 1770, subd. (a).) The underlying purpose of the CLRA is “to protect consumers against unfair and deceptive business practices and
to provide efficient and economical procedures to secure such protection.” (Civ.Code, § 1760.) Any consumer who suffers any damage as a
[8][9][10] A UCL cause of action “ ‘may be based on representations to the public which are untrue, and “ ‘also those which may be accurate
on some level, but will nonetheless tend to mislead or deceive…. A perfectly true statement couched in such a manner that it is likely to
mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under’ ” the UCL.’ [Citation.]” (Linear
Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 134, 61 Cal.Rptr.3d 221.) “Whether a practice is deceptive, fraudulent,
or unfair is generally a question of fact which requires ‘consideration and weighing of evidence from both sides….’ [Citations.]” (Id. at pp. 134-
another page, the brochure explains that the 51 mpg rating refers to the manual transmission hybrid model, and identifies an EPA estimate of
48 mpg for the variable transmission model:
FN10. There are multiple footnote references in the text of the brochure, but the copy of the brochure in the appellate record does
CHAPTER 45: CONSUMER LAW 729
not include the text of the footnotes referenced in the document. One of those footnotes occurs at this point in the text.
FN11. Another footnote appears at this point in the brochure, with the footnote text not included in the copy of the exhibit provided
in the appellate record.
c. Analysis
(i) Paduano has raised triable issues of fact regarding Honda’s advertising claims
[11] Paduano makes much of the fact that Honda’s brochure shows the phrase “51 mpg” in large font, contending that Honda is advertising
the 51 mpg fuel economy “without qualification,” and that this mileage figure is different from the EPA’s 49 mpg estimate on the Monroney
“[T]he tests do not take Hybrid vehicles into consideration, and Hybrid vehicle estimates are inflated based on the test procedures. Honda
told [Paduano 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. Only after purchase did Honda [tell Paduano that] Hybrids require a particular
driving style in order to be fuel efficient, and short trips penalize hybrid efficiency more so than regular cars.”
Honda asserts that the statement “Just drive the Hybrid like you would a conventional car, while saving on fuel bills,” when read in the context
of it being part of a small “FAQs” section in the brochure, simply refers to the fact that the Hybrid does not have to be plugged in. In support
of this assertion, Honda points out that the sentence in question appears within a short paragraph that follows the question, “I NEVER HAVE
TO PLUG IT IN, RIGHT?” The statement follows other sentences that relate to not having to plug in the vehicle, which read as follows: “That’s
correct-never. The charging system is completely self-sufficient so the powertrain automatically recharges the onboard batteries while you’re
driving.”
Although the challenged statement regarding driving a hybrid as one would a conventional car and saving on fuel costs appears at the end of a
paragraph that contains these other statements, the statement in question does not seem to refer to the fact that one need not plug in the
vehicle when not driving. It is not clear 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 is also unclear
730 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
document.
On summary judgment, it is Honda’s burden to present evidence demonstrating that a reasonable person could not find that it is more likely
than not that Honda’s statements are false and/or misleading. Honda has not met this burden, since Honda presented no evidence to
FN13. We do not intend to imply that Paduano will be meritorious in this action. Rather, the state of the evidence demonstrates that
a fact finder could reasonably conclude that Honda’s brochure statements are false and/or misleading. In such a situation, summary
judgment is not appropriate.
2), Congress has the power to preempt state law concerning matters that lie within the authority of Congress. [Citation.] In determining
whether federal law preempts state law, a court’s task is to discern congressional intent. [Citation.] Congress’s express intent in this regard
1170.)
[19][20] In interpreting the federal law at issue here, we are informed “by a strong presumption against preemption.” (Farm Raised Salmon
Cases, supra, 42 Cal.4th at p. 1088, 72 Cal.Rptr.3d 112, 175 P.3d 1170.) “ ‘[B]ecause the States are independent sovereigns in our federal
system, we have long presumed that Congress does not cavalierly pre-empt state law causes of action. In all pre-emption cases, and
particularly in those in which Congress has “legislated … in a field which the States have traditionally occupied” [citation], we “start with the
[23] Honda first contends that the provisions of title 49 United States Code section 32919 expressly preempt Paduano’s UCL and CLRA claims.
Title 49 United States Code section 32919(a) provides in relevant part that “[w]hen an average fuel economy standard prescribed under this
chapter is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards
or average fuel economy standards for automobiles covered by an average fuel economy standard under this chapter.” Honda contends that
through his claims, Paduano is seeking to “enforce a law or regulation related to fuel economy standards,” and that his claims are therefore
In addition to meeting any other fuel economy standards prescribed by the Secretary of Transportation, passenger automobiles must meet
the minimum standard for domestically manufactured passenger vehicles set by Congress, which, pursuant to statute, is the greater of 27.5
mpg, or 92 percent of the average fuel economy projected for the combined domestic and non-domestic passenger fleets manufactured by all
manufacturers in a model year (49 U.S.C. § 32902(b)). Non-passenger automobiles must meet the standards set by the Secretary of
Transportation (id. at § 32902(a)). Congress directs the Secretary to set fuel economy standards at “the maximum feasible average fuel
FN14. The dissent is under the misimpression that the phrase “fuel economy standards” as used in title 49 United States Code
section 32919(a) means the same thing as the “fuel economy” of a model of vehicle. By suggesting that Congress was referring to
the fuel economy estimate required on a Monroney sticker when it used the phrase “fuel economy standards” as one of two
disjunctive prepositional objects in section 32919(a) of title 49 of the United States Code, the dissent renders meaningless the word
“standards” in this phrase. Common sense dictates that a “standard” is a benchmark set by the governmental entity under whose
or group of vehicles such as, for example, all hybrid vehicles. In other words, the inclusion of the phrase “fuel economy standards”
serves to broaden the scope of the preemption provision to cover more than state laws that relate to a single “performance
standard specifying a minimum level of average fuel economy applicable to a manufacturer in a model year,” which is the narrow
definition of an “average fuel economy standard” under title 49 United States Code section 32901(a)(6).
[25] Honda similarly argues that title 49 United States Code section 32919(b) prevents Paduano from pursuing his UCL and CLRA claims. That
by itself, deceptive. Rather, Paduano maintains that Honda has voluntarily made additional assertions, beyond the disclosure of the mileage
estimates, that are untrue or misleading, and that federal law does not require, or even address, these additional assertions. Paduano’s claims
are based on statements Honda made in its advertising brochure to the effect that one may drive a Civic Hybrid in the same manner as one
would a conventional car, and need not do anything “special,” in order to achieve the beneficial fuel economy of the EPA estimates. It is not,
as Honda maintains, the disclosure of the EPA estimates that Paduano claims is deceptive per se. What Paduano is challenging is Honda’s
Practices Act (MUTPA). The express preemption provision at issue in the case, 15 United States Code section 1334(b), provides that “ ‘[n]o
requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any
cigarettes on the packages of which are labeled in conformity with the provisions of this chapter.’ [Citation.]” (Altria Group, supra, at p. —-,
129 S.Ct. at p. 544.)
In interpreting this preemption provision, the Supreme Court noted that “the text of § 1334(b) does not refer to harms related to smoking and
the words “based on” in the provision of the Labeling Act at issue in Altria Group. Here, neither the UCL nor the CLRA is a law that is based
“on” disclosure of fuel economy or fuel operating costs; rather, the UCL and CLRA are both laws of general application that create a duty not
to deceive, just like the MUTPA. Thus, the phrase “on disclosure of fuel economy or fuel operating costs,” like the language in the Labeling Act
addressed in Altria Group, cannot be construed to encompass the general duty not to make fraudulent or misleading statements.
(b) Implied preemption principles do not require that Paduano’s deceptive advertising claims be dismissed
[26] Honda also argues that implied preemption principles apply to bar Paduano’s claims.FN15 According to Honda, Paduano’s “advertising
claims are preempted for the additional reason that they would stand as an obstacle to the accomplishment of the purpose underlying [the]
federal fuel economy disclosure regime.” We disagree.
FN15. Even where Congress may not have explicitly stated an intent to preempt state authority, an implied intent can be found “ ‘(i)
when it is clear that Congress intended, by comprehensive legislation, to occupy the entire field of regulation, leaving no room for
1170.)
[27][28] The fact that the EPCA contains an express preemption clause is useful for purposes of determining the existence and scope of any
implied preemption. (See Farm Raised Salmon Cases, supra, 42 Cal.4th at p. 1092, 72 Cal.Rptr.3d 112, 175 P.3d 1170 [“the provision’s [express
preemption] language is significant because it informs our analysis of the existence of any implied preemption”].) “ ‘[A]n express definition of
the pre-emptive reach of a statute “implies”–i.e., supports a reasonable inference-that Congress did not intend to pre-empt other matters….’
advertising that suggest that its hybrid vehicles can attain the high fuel economy represented in the EPA estimates while being driven in the
same manner as one would drive a conventional car. Thus, Honda would not be required to make additional statements about the EPA
estimates, but, rather, would merely be required to stop making false or misleading claims about how one can attain fuel economy similar to
the EPA estimates.
In fact, one could conclude that the statements in Honda’s advertising brochure contradict the fuel economy information that the Monroney
Honda’s framing of the issue again misses the point. Paduano’s claims may be understood as arising from statements Honda made in its
advertising-statements that go beyond simply providing the EPA fuel economy estimates for its vehicles. It is the combination of the EPA fuel
estimates with Honda’s additional assertions in its advertising materials that creates the problem of which Paduano complains. Paduano does
not maintain that the EPA fuel economy estimates, by themselves, are inherently deceptive. Rather, it is the use of the EPA fuel economy
estimates in advertising in which additional claims are made as to how one can achieve such economy, that Paduano challenges as deceptive.
point-of–sale, reciting fuel estimates based on methods mandated by the Environmental Protection Agency (‘EPA’)…. While federal law
requires that the Monroney Stickers disclaim these estimates with the words, ‘[a]ctual mileage will vary,’ Defendant’s print and Internet
advertising materials either (1) weakened the disclaimer to read, ‘[a]ctual mileage may vary,’ or (2) omitted the disclaimer entirely.” (True,
supra, 520 F.Supp.2d at p. 1178.)
Honda argued that the Energy Policy and Conservation Act preempted the plaintiffs’ claims. The True court described the requirements of the
In rejecting Honda’s preemption argument, the True court noted Honda’s attempt to misstate the plaintiff’s claims by “characterize[ing]
Plaintiff’s complaint as a challenge to EPA testing guidelines….” (True, supra, 520 F.Supp.2d at p. 1181.) The court commented that, if properly
described, the plaintiff’s complaint “challenge[d] the manner in which Defendant advertised the Honda Civic Hybrid in mediums other than
the Monroney Sticker and information booklet.” (Ibid.) The True court explained:
“As no clear and manifest Congressional intent to regulate advertising exists, the Court must adhere to the presumption that Congress