LEGAL FILE

Judge throws out deceptive-ads lawsuit against Toyota in Arkansas

When a new 2006 Toyota Prius averaged 42 to 44 mpg, an Arkansas couple filed a complaint accusing Toyota of deceptive advertising.
Manufacturers that include EPA-mandated fuel economy figures in their advertising are exempt from deceptive-practice claims under Arkansas law, a federal judge has ruled in a case against Toyota Motor Sales U.S.A. Inc.

Chief Judge Jimm Hendren of the U.S. District Court for the Western District of Arkansas said manufacturers are immune from such civil suits because the Federal Trade Commission requires them to use those EPA figures in their advertising.

As a result, Hendren dismissed a class-action complaint by Andrew and Lynda Godfrey, who had bought a new 2006 Prius. The Godfreys had sought damages, including punitive damages, on behalf of all Arkansas residents who had bought or leased a Prius since 2000, the year it went on the market.

There will be no appeal, said the Godfreys' lawyer, Bruce Mulkey, of Rogers, Ark.

Meanwhile, in Florida, a federal judge is considering Toyota's request to dismiss a similar lawsuit under that state's laws, said Columbia, S.C., lawyer Steven McKelvey, who represents Toyota in both cases.

Fair play
Issue: Were Toyota Prius ads that included EPA-estimated overall fuel efficiency of 55 mpg deceptive, as Arkansas customers allege?
Outcome: Federal judge says no, ruling manufacturers are exempt from consumer protection claims for using EPA figures. The plaintiffs’ lawyer says there will be no appeal.

The case

The Godfreys asserted that in choosing a Prius, they relied on Toyota's ads and statements by the dealership that the car had a fuel efficiency of 60 mpg in city driving. But, they say, they "only average 42 to 44 mpg while predominately driving their Prius in the city."

The Arkansas deceptive-trade-practices suit accused Toyota of inducing customers to buy a Prius "with false statements of its fuel efficiency and the cost savings realizable from its purchase."

Specifically, Toyota advertised "remarkable overall efficiency of 55 miles per gallon of gasoline — 60 mpg in the city and 51 mpg in highway driving conditions — when Toyota knew or should have known that the Prius would not perform as represented."

The suit refers to U.S. Energy Department figures indicating "that the true overall efficiency of the Prius is much closer to 46 mpg — 48 in the city and 45 in highway driving conditions — and may be lower than that."

In asking Hendren to toss out the case, Toyota successfully argued that "there is nothing unfair or deceptive about properly identifying and advertising these official government estimates."

Hendren agreed, saying the EPA is responsible for establishing the test methods and calculations for determining fuel economy, and "federal regulations require that the Monroney vehicle stickers contain the phrase 'your actual mileage will vary depending on how you drive and maintain your vehicle.' "

The judge also said the law bars suits concerning advertising that is permissible under FTC rules. He added, "Clearly, the FTC regulations require the use of EPA estimates in fuel economy advertisements."

EPA estimate was required

Finally, Hendren rejected a claim that Toyota had been unjustly enriched by its misleading advertising, saying, "Toyota had the legal right to advertise the EPA fuel economy estimates as it was required to do by the FTC."

In California, a federal judge last year denied a motion by American Honda Motor Co. to toss out a similar case without trial.

But that suit, which is pending, involves the Civic Hybrid and did not raise the legal issue of FTC requirements.

You can reach Eric Freedman at freedma5@msu.edu

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