Source: http://openjurist.org/660/f2d/311/skelton-v-general-motors-corporation
Timestamp: 2017-02-26 14:42:50
Document Index: 58608345

Matched Legal Cases: ['§ 2310', '§ 110', '§ 110', '§ 110', '§ 110', '§ 2310', '§ 2310', '§ 5', '§ 45', '§ 2310', '§ 2310', '§ 110', '§ 110', '§ 101', '§ 110', '§ 103', '§ 2303', '§ 101', '§ 103', '§ 101', '§ 101', '§ 101', '§ 2301', '§ 110', '§ 2310', '§ 101', '§ 110', '§ 101', '§ 2310', '§ 101', '§ 102', '§ 101', '§ 102', '§ 101', '§ 110', '§ 102', '§ 2302', '§ 110', '§ 110', '§ 2310', '§ 110', '§ 703', '§ 101', '§ 2301', '§ 101', '§ 700', '§ 101', '§ 101', '§ 101', '§ 1331', '§ 1331', '§ 2', '§ 110', '§ 2310', '§ 1337', '§ 110', '§ 110', '§ 101', '§ 101', '§ 101', '§ 110', '§ 110', '§ 101']

660 F2d 311 Skelton v. General Motors Corporation | OpenJurist
660 F. 2d 311 - Skelton v. General Motors Corporation HomeFederal Reporter, Second Series 660 F.2d.
660 F2d 311 Skelton v. General Motors Corporation 660 F.2d 311
1981-2 Trade Cases 64,333, 32 UCC Rep.Serv. 1118
Arlie Glen SKELTON, Jr., et al., Plaintiffs-Appellees,v.GENERAL MOTORS CORPORATION, Defendant-Appellant.
No. 80-2781.
Argued Feb. 19, 1981.Decided Sept. 28, 1981.Rehearing and Rehearing En Banc Denied Dec. 11, 1981.
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.
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.1
Section 110(d) creates a private cause of action for breach of "written warranty," subject to the requirements that: (1) the consumer must have an individual claim of at least $25; (2) the total amount in controversy must equal or exceed $50,000; and (3) if brought as a class action, the complaint must name at least one hundred plaintiffs. 15 U.S.C. § 2310(d)(3) (1976).6 Section 110 also makes any failure to comply with the requirements of the Act a violation of § 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1) (1976)), and empowers the FTC and the Attorney General to seek injunctive relief against (1) failure to comply with any obligation under the Act, and (2) written warranties which may be "deceptive" to a reasonable individual. 15 U.S.C. § 2310(c) (1976).
15 U.S.C. § 2310(d)(1) (1976).
The district court properly rejected plaintiffs' argument that the Act's draftsmen intended in § 110(d) to create a federal private cause of action for breach of all written express warranties.8 None of the legislative history offered by plaintiffs in this record provides the clear evidence of Congressional intent necessary to overcome the "familiar principle governing the interpretation of statutes ... that if a statutory definition of a word is given, that definition must prevail, regardless of what other meaning may be attributable to the word." Evans v. Int'l Typographical Union, 76 F.Supp. 881, 887 (S.D.Ind.1948).9 Indeed, we are less than confident that it is possible to distill any unambiguous Congressional intent from the Act's legislative history. As the district court noted:
500 F.Supp. at 1184.
500 F.Supp. at 1191. Thus, the district court concluded that, whenever a manufacturer elects to extend a "written warranty" to a consumer, "(o)ther written promises presented in connection with the same transaction should also be enforceable as part of the 'written warranty.' " 500 F.Supp. at 1190.
The district court's determination that "written warranty" in § 110(d) means something more than it was defined to mean in § 101(6) has two aspects. First, the court found that the "Act itself suggests several different possible meanings of the phrase 'written warranty' " and is therefore ambiguous. 500 F.Supp. at 1187. Second, because of this ambiguity, the district court looked to the purposes of the Act, as derived from its legislative history, and concluded that § 110(d) should be construed to provide "a remedy for all written promises presented in connection with the sale of a formally warranted product." 500 F.Supp. at 1190.
One ambiguity in the use of the term "written warranty" which was identified by the district court appears in § 103(b). That subsection provides that the Act's content and disclosure requirements "shall not apply to statements or representations which are similar to expressions of general policy concerning consumer satisfaction and which are not subject to any specific limitations." 15 U.S.C. § 2303(b) (1976). The district court concluded that this provision would be "unnecessary" if the § 101(6) definition was intended to apply throughout the Act, presumably because, in the view of the district court, the generalized representations described in § 103(b) could never fall within the § 101(6) definition and were therefore statements or representations of a sort other than those defined in § 101(6). We cannot accept this supposition, however, because it is possible to construe these generalized representations to fit within the § 101(6) definition in some cases. For example, a written statement that "your money will be refunded if you are not completely satisfied" might be deemed to constitute an "undertaking in writing in connection with the sale by a supplier of a consumer product to refund ... in the event that such product fails to meet the specifications set forth in the undertaking," i. e., complete satisfaction. 15 U.S.C. § 2301(6)(B) (1976). Section 103(b) may quite plausibly have been included in the Act precisely to foreclose such interpretations.18
A second ambiguity identified by the district court concerns § 110(c)(2)(B), which provides that a "deceptive warranty" includes a "written warranty created by the use of such terms as 'guaranty' or 'warranty,' if the terms and conditions of such warranty so limit its scope and application as to deceive a reasonable individual." 15 U.S.C. § 2310(c)(2)(B) (1976). The district court concluded that this "apparently" means that "a written warranty can be 'created' by the use or misuse of the words 'guaranty' or 'warranty,' even if the document using these terms does not include representations which constitute warranties under § 101(6)." 500 F.Supp. at 1187-88. Although the district court offers a sensible reading of § 110(c)(2)(B), its interpretation is not by any means required by the language of that section, and the interpretation is without support in the legislative history. The deceptive warranty provision was taken largely verbatim from the House version of the Act, which defined "deceptive warranty" to mean, inter alia, "a warranty (as so defined (in section 101(10)))19 created by the use of such terms as 'guaranty' or 'warranty' ..." Thus, while the draftsmen's diction may have been suspect (insofar as they used the phrase "created by the use of" instead of "including" or "containing"), it appears most plausible that they intended for the term "deceptive warranty" to mean a written warranty as defined in § 101(6), which contains such terms as "guaranty" or "warranty," if the warranty's terms and conditions "so limit its scope and application as to deceive a reasonable individual." 15 U.S.C. § 2310(d) (1976). See also C. Reitz, Consumer Protection Under the Magnuson-Moss Warranty Act 77 (1978).
The district court also found an inconsistency between the § 101(6) definition of "written warranty" as a particular type of promise, affirmation or undertaking, and § 102, which "authorizes the Federal Trade Commission to promulgate rules requiring 'inclusion in the written warranty' of various explanations of the rights of the consumer, including such statements as a 'brief, general description of the legal remedies available to the consumer.' " 500 F.Supp. at 1187 (emphasis in original). From this, the district court concluded that "in the written warranty" suggests that "(a) written warranty is not just a particular type of 'promise' or 'affirmation' but a type of document or written contract as well." Id. In its brief on appeal, GM similarly stated that a " 'written warranty' can be both a particular type of written promise or affirmation and the document incorporating it."
Accord, Hotel Equities Corp. v. Commissioner, 546 F.2d 725, 728 (7th Cir. 1976); Dragstrem v. Obermeyer, 549 F.2d 20, 24 n.4 (7th Cir. 1977). See also Nachman Corp. v. Pension Benefit Guaranty Corp., 592 F.2d 947, 952-53 n.6 (7th Cir. 1979), aff'd, 446 U.S. 359, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980).
The term "written warranty" serves a central function in the Act of identifying the particular representations that are subject to the Act's disclosure and content requirements. Because of the function it serves, it is important that the term have a single, precise meaning. The § 101(6) definition provides that unambiguous meaning, and that definition is used (all things considered) with commendable aptness by the draftsmen in the forty-odd appearances of the term "written warranty" in every section of the Act. We cannot agree that syntactical slips such as the use of the preposition "in" in § 102, create ambiguities in the statutory scheme of sufficient weight to justify discarding the meticulously worded definition of "written warranty" in § 101(6) in favor of an undefined "document," or "pile of written documents," as urged by the district court. See 500 F.Supp. at 1190.21V.
As Judge Moran noted, 500 F.Supp. at 1184, he was not the first one to have some difficulty interpreting the Act. Others before him have characterized it as serving as no exemplar of legislative clarity. I would, therefore, not begin and end by viewing the Act's definition provisions in such isolation as to conclude that the beneficial consumer protection purposes of the Act are thereby completely limited. Were this a criminal statute, I might be bound to resolve the question in favor of General Motors, but it is not.
This case is related to the much-publicized "engine interchange" litigation, a consolidated class action brought against GM on behalf of all purchasers of 1977 Oldsmobile automobiles equipped with engines produced by GM's Chevrolet division. That litigation has been before this court twice on questions concerning, first, the district court's approval of a subclass settlement, In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106 (7th Cir.), cert. denied, 444 U.S. 870, 100 S.Ct. 146, 62 L.Ed.2d 95 (1979) and, second, the sufficiency of a notice which detailed an offer of settlement to individual subclass members, Oswald v. McGarr, 620 F.2d 1190 (7th Cir. 1980). Nothing in our opinions or in the district court's orders in that case, however, directly addresses the issue before us here namely, whether a warranty of description of an automobile component is actionable as a "written warranty" under § 110(d) of Magnuson-Moss. In this regard, plaintiffs have referred us to the following paragraph from In re General Motors Corp. Engine Interchange Litigation:
See Miller and Kanter, Litigation Under Magnuson-Moss: New Opportunities in Private Actions, 13 U.C.C. L.J. 10, 14 (1980). Cf. Fischbach & Moore Int'l Corp. v. Crane Barge R-14, 476 F.Supp. 282, 287 (D.Md.1979) ("Where an affirmation of fact is made on a product or its container, an implied warranty arises that the product will conform to the representations.") We of course express no opinion concerning the district court's holding in this case that the transmission switch did not constitute a breach of implied warranty because plaintiffs' complaint did not "suggest that the cars were unfit for driving or below a minimally acceptable standard of quality." 500 F.Supp. at 1192.
Not only does the Act not require the provision of warranties of any kind, it also bars the FTC from so requiring as well, in § 102(b)(2), which reads: "Nothing in this title ... shall be deemed to authorize the Commission ... to require that a consumer product or any of its components be warranted." 15 U.S.C. § 2302(b)(2) (1976)
Additionally, if a supplier has established an internal dispute settlement procedure pursuant to § 110(a), the consumer generally may not commence an action under § 110(d) without first having resorted to the established procedure. 15 U.S.C. § 2310(a)(3) (1976). The minimum requirements for any informal dispute settlement procedure created pursuant to § 110(a) are set forth at 16 C.F.R. § 703 (1980)
Plaintiffs' complaint alleged that GM had warranted that its automobiles contained THM 350 (M38) transmissions, or "transmissions of similar quality and performance ... and that (such transmissions) would meet a specified level of performance." The district court concluded that such a warranty did not fall within the § 101(6) definition of "written warranty," because it did not affirm that the transmission would "meet a specified level of performance over a specified period of time." 15 U.S.C. § 2301(6) (1976) (emphasis added). See 500 F.Supp. at 1185-86. This conclusion is consistent with the FTC's interpretation of § 101(6), which is set forth in its regulations at 16 C.F.R. § 700.3(a) (1980):
The district court noted that, by this reading of § 101(6), a representation that a "transmission would perform like a THM 350 transmission for the life of the transmission" would constitute a "written warranty," while the representation that a "transmission would perform like a THM 350 transmission" does not. The arbitrariness of this distinction is apparent, but a certain amount of arbitrariness is inevitable whenever a bright line must be drawn. And the need for a clearly circumscribed definition in the statutory scheme before us is apparent since, to comply with the Act's obligations, manufacturers and suppliers must know in advance exactly which representations are subject to those obligations. Moreover, it is quite plausible that the Act's draftsmen defined "written warranty" in § 101(6) so as to exclude general descriptions of consumer products or their components from the reach of the Act, since it would be excessively cumbersome to impose the Act's disclosure rules on every advertisement containing a description of a product or its components. On this appeal, plaintiffs do not challenge the district court's conclusion that the warranties described in their complaint are not within the § 101(6) definition. 500 F.Supp. at 1185-86.
Of course, it is inappropriate to blindly adhere to a statutory definition if such adherence would frustrate clearly expressed legislative intent. Thus, in United States v. Walton, 514 F.2d 201 (D.C.Cir.1975), the court rejected defendant's argument that the statutory definition of marijuana should prevail in a prosecution for unlawful distribution of marijuana under the Controlled Substances Act of 1970. Finding that the "legislative history is absolutely clear that Congress meant to outlaw all plants popularly known as marijuana to the extent those plants possess THC." 514 F.2d at 203-04, the court held that the term "marijuana" as used in the Act included all species of cannibus containing THC, even though the statute defined marijuana as cannibus sativa L., which, arguably, was only one of several known species of cannibus containing THC. Accord, United States v. Lupo, 652 F.2d 723 (7th Cir. 1981); United States v. Kelly, 527 F.2d 961 (9th Cir. 1976); United States v. Gavic, 520 F.2d 1346 (8th Cir. 1975)
(d)(1) For the purposes of this section, an "express warranty" is created as follows:
The House bill had not defined "written warranty," and the definition contained in the Senate bill was aptly described by the district court as a "lesson in statutory indirection." 500 F.Supp. at 1188 n.17. Section 101(8) of the Senate bill first defined a "(w)arranty in writing 'or written warranty' " as "a warranty in writing against defect or malfunction of a consumer product." Section 101(11) then defined "warranty in writing against defect or malfunction of a consumer product" in essentially the same way as the final version of the Act defined "written warranty." 119 Cong.Rec. 29490 (1974)
Under then-applicable law, for a proposed class action to have satisfied the amount in controversy requirement of 28 U.S.C. § 1331 (1976), each member of the class must have had an individual claim in excess of $10,000. Zahn v. Int'l Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973). It appears unlikely that either this proposed class action or the engine interchange class action would have met this stringent amount in controversy requirement. We note that Congress amended 28 U.S.C. § 1331 (1976) in 1980 to eliminate the minimum amount in controversy requirement. Pub.L. 96-486, § 2(a), 94 Stat. 2369 (1980)
In contrast to the Senate version of § 110, the federal jurisdictional provision of the House bill, which was adopted by the Conference, required only that each individual claim be greater than $25, although the amount in controversy in the aggregate must exceed $50,000. In addition, if the action is brought as a class action, at least 100 plaintiffs must be named. 15 U.S.C. § 2310(d)(3) (1976). The House Report stated that the purpose of these jurisdictional requirements "is to avoid trivial or insignificant actions being brought as class actions in the federal courts." H.R.Rep.No.93-1107, 93d Cong., 2d Sess., reprinted in (1974) U.S.Code Cong. and Ad.News 7724. Absent these requirements, actions could have been brought in federal court under the Act without regard to the amount in controversy. See 28 U.S.C. § 1337 (1976); Novosel v. Northway Motor Car Corp., 460 F.Supp. 541 (N.D.N.Y.1978). Thus, the federal jurisdictional requirements of the Act, although less severe than those initially adopted by the Senate, evince an intent to limit the private remedy in federal court
Plaintiffs argue that this language indicates that "there was no intention of the Conference Committee to restrict the range of written representations actionable under Section 110(d)(1)." We disagree. The negative inference urged by plaintiffs is simply too attenuated to provide the clear evidence of contrary intent necessary to override the specific language of the statute. See Zychinski v. Commissioner, 506 F.2d 637, 639 (8th Cir. 1974), cert. denied, 421 U.S. 999, 95 S.Ct. 2397, 44 L.Ed.2d 666 (1975); Luckman v. Commissioner, 418 F.2d 381, 387 (7th Cir. 1969).
Plaintiffs have referred us to portions of an amicus brief filed with the court in the Engine Interchange Litigation by Senator Magnuson and Representative Moss. Of course, such post-passage remarks of legislators are of negligible value in ascertaining the intent of Congress in passing the Act. Blanchette v. Conn. General Ins. Corp., 419 U.S. 102, 132, 95 S.Ct. 335, 352, 42 L.Ed.2d 320 (1974). It is interesting to note, however, that the Act's sponsors, in urging that GM's undisclosed substitution of Chevrolet engines in Oldsmobile automobiles constituted a breach of a written warranty under § 110(d), did not argue that § 110(d) created a federal cause of action for breach of warranties of description (or other written express warranties not within the § 101(6) definition). Rather, they argued that the representations made by GM constituted "written warranties" within the meaning of § 101(6). The plaintiffs do not argue on appeal for such an interpretation under the similar circumstances of this case, and the district court specifically rejected such a construction. See note 7, supra
(A)(i) any written affirmation of fact or written promise made at the time of sale by a supplier to a purchaser 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
Moreover, the legislative history of the Act, which the district court describes as "puzzling," 500 F.Supp. at 1188, offers no basis for the district court's rejection of the § 101(6) definition. Most of the very general legislative statements cited by the district court were made in reference to the Senate version of § 110, which, as set forth above, provided attorneys' fees for consumers who prevailed in state court actions for breach of any express or implied warranty. See Part III, supra. There is simply no clear evidence that Congress, in enacting the House version of § 110(d), intended to create a federal claim for breach of representations not within the § 101(6) definition of "written warranty."
Judge Moran's decision is reported at 500 F.Supp. 1181 (N.D.Ill.1980)
See United States v. American Trucking Associations, 310 U.S. 534, 543, 60 S.Ct. 1059, 1063, 84 L.Ed. 1345 (1940): "(E)ven when the plain meaning (of the statute) did not produce absurd results but merely an unreasonable one 'plainly at variance with the policy of the legislation as a whole' this Court has followed that purpose, rather than the literal words." (Footnotes omitted.) For one of the earliest statements of the applicable principles of statutory construction, see Heydon's Case, 30 Co. 7a, 76 Eng.Rep. 637 (Exchequer 1584): "(F)or the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law,) (among the) four things (which) are to be discerned and considered (is): ... 4th. The true reason of the remedy, and then the office of all the Judges is always to make such construction as shall suppress the mischief (at which the statute is aimed), and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief ... and to add force and life to the cure and remedy, according to the true intent of the makers of the Act...." (Emphasis added.) See generally W. Hurst, Statutes In Court 142, 184-201 (1970)