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Paduano v. American Honda Motor Co.

January 12, 2009

GAETANO PADUANO, PLAINTIFF AND APPELLANT,
v.
AMERICAN HONDA MOTOR COMPANY, INC., DEFENDANT AND RESPONDENT.



APPEAL from a judgment of the Superior Court of San Diego County, Jay M. Bloom, Judge. Affirmed in part, reversed in part. (Super. Ct. No. GIC 852441).

The opinion of the court was delivered by: Aaron, J.

CERTIFIED FOR PUBLICATION

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.

Honda filed a motion for summary judgment in which it argued that the federal Energy Policy and Conservation Act (EPCA) preempts all of Paduano's claims. In the alternative, Honda maintained that summary judgment was appropriate because Paduano's claims lack substance under California law. Specifically, Honda asserted that Paduano's warranty claims fail because there is no evidence that Honda warranted that Paduano would achieve a particular level of fuel economy. Honda further argued that there is no evidence that Paduano's vehicle suffers from any defect that would cause it to attain poor mileage. With regard to Paduano's claims of deceptive advertising, Honda asserted in its motion for summary judgment that its advertising was not, in fact, misleading. The trial court agreed with all of Honda's claims and granted the motion for summary judgment.

On appeal, Paduano contends that the trial court erred in concluding that federal law preempts his claims. He also argues that there remain triable issues of material fact with respect to all of his causes of action.

We conclude that the trial court correctly granted summary adjudication in favor of Honda on Paduano's warranty claims. We therefore affirm 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 received an EPA rating of 47 miles per gallon (mpg) for city driving and 48 mpg for highway driving. The label also stated, as required by federal regulations, "ACTUAL MILEAGE will vary with options, driving conditions, driving habits and vehicle[']s condition."

Paduano stated that he had read and relied on statements Honda made in an advertising brochure describing the attributes of the 2004 Civic Hybrid in deciding to purchase the vehicle. The brochure highlighted an EPA estimate of 51 mpg for the manual transmission version of the Civic Hybrid, but noted that this estimate did not apply to the continuously variable transmission version. The brochure contained other statements about the vehicle, as well.*fn3

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 during the summer and fall of 2004 to attempt to find out "how [he] could get higher mileage out of [his] car." Paduano was told that the Civic Hybrid engine required a "break-in" period before it would achieve improved fuel economy. The break-in period was described variously to Paduano as 3,000 miles, 5,000 to 10,000 miles, and 7,500 miles. However, a Honda representative testified during a deposition in this case that, in actuality, no such break-in period is required in order for a Civic Hybrid to achieve "improved" mileage.

An employee at one of the Honda dealerships that Paduano visited conducted a road test, during which the employee claimed that Paduano's car had achieved 49.1 mpg.*fn4 That employee informed Paduano that in order to achieve the kind of gas mileage that the EPA had estimated for his vehicle, a driver must drive the vehicle in a specialized manner. The employee told Paduano that "it is very difficult to get MPG on [the] highway and to drive with traffic in a safe manner," and further indicated that the specialized driving that would be required in order to achieve the estimated mileage "would create a driving hazard."

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' [¶]'[t]he EPA to change [the] mileage'... [¶]'[r]ating,'" 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.

B. Procedural Background

Paduano filed a complaint on August 15, 2005, in which he alleged two causes of action for violations of the Song-Beverly Consumer Warranty Act (Song-Beverly) (Civ. Code, § 1793.2, subd. (d)), one cause of action for a violation of the federal Magnuson-Moss Warranty Act (Magnuson-Moss) (15 U.S.C., § 2301 et seq.); one cause of action for violation of the CLRA (Civ. Code, § 1770, subd. (a)); and one cause of action for violation of the Unfair Competition Law (UCL) (Bus & Prof. Code, § 17200 et seq.).

On September 22, 2005, Honda filed an answer to Paduano's complaint. Honda did not raise the issue of federal preemption in its answer.

On January 13, 2006, Honda filed a case management statement in which Honda notified the court that it expected to file a motion for summary adjudication, and that the plaintiff's deposition and the deposition of Honda's designated representative would be completed by the end of January 2006. Honda said nothing about amending its answer, nor did Honda indicate that it planned to raise a federal preemption defense. The parties attended a case management conference on January 13, 2006, at which Honda again made no mention of the federal preemption defense.

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.

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.

On September 15, 2006, the trial court ruled that Honda was entitled to summary judgment. The court concluded that "[a]s to plaintiff's contention that his gas mileage was so bad that there must be a defect in the car, no evidence is presented to show the car had any manufacturing defect." In addition, the trial court determined that "the representations in [Honda's] brochure appear to comply with 16 C.F.R. 259.2." The court also reaffirmed a number of its tentative rulings, including that (1) Paduano's state law warranty claims are preempted by federal law; (2) Honda made no express warranty as to gas mileage; (3) section 32908(d) clarifies that Honda's disclosures regarding gas mileage do not constitute a warranty under state or federal law; (4) Paduano's deceptive advertising and misrepresentation claims are preempted by section 32919; and (5) the brochure "does not contain any representation or warranty that plaintiff would be able to obtain a certain fuel efficiency while driving his car in his customary manner."

The trial court granted summary judgment in favor of Honda on October 31, 2006. Entry of judgment was served on November 8, 2006. Paduano filed a timely notice of appeal on January 2, 2007.

III. DISCUSSION

Paduano asserted five causes of action in his complaint, three of which are warranty claims based on state and federal law, and two of which are state law claims under the CLRA and UCL, based on allegations of misrepresentation. On appeal, Paduano contends that the trial court erred in concluding that federal law preempts his claims of misrepresentation and breach of warranty. Honda maintains that federal law "preempts all state and local laws that impose fuel economy disclosure requirements that are not'identical' to those imposed by federal law." Honda further contends that it "is entitled to summary judgment on [Paduano's] claims because the record demonstrates that Honda's 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 makes regarding fuel economy. Because there remain material issues of fact with respect to whether some of Honda's advertising claims concerning its Civic Hybrid are false and or misleading, the trial court should not have granted summary adjudication of Paduano's causes of action challenging Honda's advertising.

A. Legal Standards

Summary judgment is appropriate when "all the papers submitted show that there is no triable issue as to any material fact" such that a moving party establishes the right to the entry of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) "The burden of persuasion remains with the party moving for summary judgment." (Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003 (Kahn), citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, 861.) "When the defendant moves for summary judgment, in those circumstances in which the plaintiff would have the burden of proof by a preponderance of the evidence, the defendant must present evidence that would preclude a reasonable trier of fact from finding that it was more likely than not 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.)

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 judgment as a matter of law. [Citations.]'" (Trop v. Sony Pictures Entertainment, Inc. (2005) 129 Cal.App.4th 1133, 1143, quoting Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222--223.) A trial court's ruling granting summary judgment may be affirmed on appeal if it is proper on any theory of law applicable to the case. (Farron v. City and County of San Francisco (1989) 216 Cal.App.3d 1071, 1074.)

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 32901 defines "average fuel economy" as "average fuel economy determined under section 32904 of this title [(49 U.S.C. § 32904), entitled'calculation of average fuel economy'," and defines "average fuel economy standard" as "a performance standard specifying a minimum level of average fuel economy applicable to a manufacturer in a model year." That section also provides that "fuel economy" refers to "the average number of miles traveled by an automobile for each gallon of gasoline (or equivalent amount of other fuel) used, as determined by the Administrator under section 32904(c) of this title [49 United States Code]."

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 (except under section 32908) shall be rounded off to the nearest.1 of a mile a gallon. The Administrator shall decide on the quantity of other fuel that is equivalent to one gallon of gasoline. To the extent practicable, fuel economy tests shall be carried out with emissions tests under section 206 of the Clean Air Act (42 U.S.C. 7525)."

Title 49 United States Code section 32908(b)(1) requires that every automobile manufacturer "attach a label to a prominent place on each automobile manufactured in a model year."*fn6 That provision provides:

"(1) Under regulation of the Administrator of the Environmental Protection Agency, a manufacturer of automobiles shall attach a label to a prominent place on each automobile manufactured in a model year. The dealer shall maintain the label on the automobile.

The label shall contain the following information: "(A) the fuel economy of the automobile.

"(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).)

Title 49 United States Code section 32908(d) provides that "[a] disclosure about fuel economy or estimated annual fuel costs under this section does not establish a warranty under a law of the United States or a State."

Title 49 United States Code section 32919 sets forth the preemption principles applicable to the chapter. That section provides in relevant part:

"(a) General. When an average fuel economy standard prescribed under this chapter [(49 U.S.C. §§ 32901 et seq.)] 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 [(49 U.S.C. §§ 32901 et seq.)]. "(b) Requirements must be identical. When a requirement under section 32908 of this title [(49 U.S.C. § 32908)] is in effect, a State or a political subdivision of a State may adopt or enforce a law or regulation on disclosure of fuel economy or fuel operating costs for an automobile covered by [49 United States Code] section 32908 only if the law or regulation is identical to that requirement."

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 defect free or will meet a specified level of performance over a specified period of time... " constitutes a written warranty (15 U.S.C. § 2301(6)(A)). Under Song-Beverly, an express warranty is "[a] written statement arising out of a sale to the consumer of a consumer good pursuant to which the manufacturer, distributor, or retailer undertakes to preserve or maintain the utility or performance of the consumer good or provide compensation if there is a failure in utility or performance...." (Civ. Code, § 1791.2, subd. (a)(1).) Paduano asserts that Honda's warranty, which provides in relevant part that "every new Honda is covered, except for tires, for 3 years or 36,000 miles," applies to Honda's advertising claims that the Civic Hybrid would achieve a certain fuel economy level. According to Paduano, because the warranty does not expressly exclude "mileage related defects," Honda must have warranted that Paduano's vehicle would achieve the EPA estimated mileage.

The trial court concluded that federal law preempts Paduano's warranty claims, and that in any event, Honda did not provide a warranty as to gas mileage. We ...


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