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Toyota Not Liable for Prius Fuel Estimates

8 Apr, 2014 By: Jeffrey Richter, Arthur Yoon

If you have seen advertisements for hybrid vehicles, chances are that you have marveled at the fantastic claims regarding EPA-estimated gas mileage. But if the car manufacturer had internal data that conflicted with the EPA fuel estimates, could the manufacturer still advertise the EPA fuel estimates knowing that its own internal data showed that such estimates were inaccurate?

In Gray v. Toyota Motor Sales U.S.A. Inc., the plaintiffs claimed that they relied on Toyota’s advertisement that the Prius offered an EPA-estimated 55 miles per gallon (MPG) and, when their Prius’ failed to achieve 55 mpg, they sued Toyota for violation of California’s Unfair Competition Law (UCL), California’s Consumer Legal Remedies Act (CLRA), and California’s common law fraudulent concealment laws. Although the plaintiffs acknowledged that the fuel economy numbers advertised by Toyota for the Prius were calculated according to the method mandated by the EPA, they contended that Toyota knew the EPA fuel estimates were inaccurate and could not be achieved in a “real-world” setting.

In light of Toyota’s knowledge that the published EPA mileage estimates were inaccurate, the plaintiffs argued that Toyota’s failure to disclose the results of its internal fuel efficiency tests amounts to an actionable omission. The plaintiffs contended that Toyota’s representations regarding fuel economy demonstrated the manner by which Toyota validated consumers’ reasonable expectations that they would achieve 55 mpg under real-world driving conditions, and that Toyota’s failure to disclose internal fuel economy data for the Prius, which varied from the marketed EPA fuel economy estimates, violated California laws.

The U.S. Court of Appeals considered this matter after the plaintiffs appealed the trial court’s decision to dismiss the lawsuit based on the trial court’s determination that Toyota did not have a duty to disclose its internal fuel economy data. Because the plaintiffs proceeded solely on a “pure-omission” theory of liability, the appellate court concluded that the viability of each of the three causes of action alleged turned on whether Toyota owed plaintiffs a duty of disclosure.

The appellate court examined California law to determine whether Toyota had a duty to disclose internal fuel economy data that was contrary to EPA estimates. When analyzing a UCL, CLRA, or fraudulent concealment claim, California law instructs that a manufacturer’s duty to consumers is limited to its warranty, unless a safety issue is present or there has been some affirmative misrepresentation. When applied to the fuel economy context, the appellate court stated that, as a matter of law, there is nothing false or misleading about a car manufacturer’s advertising that identifies the EPA fuel economy estimates for the car. Thus, no misrepresentation occurs when a car manufacturer merely advertises EPA estimates.

The plaintiffs were unable to establish that Toyota violated its duty under California law. The Plaintiffs did not allege that their case was governed by an existing warranty or that any affirmative misrepresentations were made by Toyota. Rather, they only claimed that Toyota failed to disclose certain information known to it, which conflicted with EPA estimates. California law, however, does not recognize a cause of action for publicizing EPA fuel economy estimates and omitting further explanation.

Even if California law did allow for suits based on omissions relating to fuel economy, Toyota marketed the Prius with valid EPA fuel economy estimates along with the disclaimer “actual mileage may vary.” This disclaimer by Toyota further emphasized the fact that Toyota’s marketing was not unfair, likely to deceive, or fraudulent under California law, according to the appellate court.

While the court’s determination may be surprising to consumers and protective of car manufacturers, it should not be relied upon by advertisers outside the context of a fuel economy case. Toyota’s practice of advertising EPA estimates, along with the disclaimer “actual mileage may vary,” has been a practice of car advertising that has been examined and accepted by the courts on several occasions under California law. Advertising claims of a product’s efficacy need to be examined on a case-by-case basis taking into account the specific industry and established law.

Jeffrey Richter and Arthur Yoon are attorneys at Blank Rome LLP. They can be reached at (424) 239-3400 or via E-mail at [email protected] and [email protected].

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