Opinion ID: 616668
Heading Depth: 2
Heading Rank: 2

Heading: Indiana Deceptive Consumer Sales Act Claim Survives Summary Judgment

Text: We now turn to the Andersons' claim under the Indiana Deceptive Consumer Sales Act (IDCSA), which is premised on Gulf Stream's alleged mislabeling of the Tourmaster. The Andersons contend that it was improper for Gulf Stream to have designated the Tourmaster as a 2009 model because the Tourmaster was manufactured to fulfill an order for a 2008 model year Tourmaster and did not have the characteristics of a 2009 Tourmaster. The district court concluded that federal regulations permit a second-stage manufacturer that builds multi-stage vehicles, such as Gulf Stream, to assign model years in this fashion. Gulf Stream contends that, as a result, the Andersons' claim under the IDCSA fails because the IDCSA does not apply to an act or practice that is ... expressly permitted by federal law, rule, or regulation. See IC § 24-5-0.5-6. Multi-stage vehicles are motor vehicles that are produced in two or more stages. See Federal Motor Vehicle Standards; Roof Crush Resistance, 76 Fed.Reg. 15903-01 (proposed Mar. 22, 2011) (to be codified at 49 C.F.R. pt. 571). These vehicles are not produced by a single manufacturer on an assembly line as is the typical passenger car or sport utility vehicle. Id. Instead, one manufacturer produces an incomplete vehicle, which in turn requires further manufacturing operations by a second manufacturer to become a completed vehicle. Id. An incomplete vehicle is an assemblage consisting, at a minimum, of the chassis, power train (which includes the engine), steering system, suspension system, and braking system, in the state that those systems are to be part of the completed vehicle, but that requires further manufacturing operations to become a completed vehicle. 49 C.F.R. § 567.3 (1996). In 1975, the Federal Trade Commission (FTC) published a statement of its Enforcement Policy regarding the designation of model years to motor vehicles to guide manufacturers and distributors in assigning model years to all vehicles, including incomplete vehicles used in the construction of motor homes. Enforcement Policy Regarding Designation of Model Year of Motor Vehicles, 40 Fed. Reg. 23845 (June 3, 1975), codified at 16 C.F.R. § 14.11 (1975). The FTC was concerned about the misleading standards used by some manufacturers to designate model years. Id. In particular, several manufacturers were changing the model years displayed on the Certificates of Origin of vehicles that remained unsold at the end of a model year to suggest that the vehicles had been manufactured during the upcoming model year. Id. Other manufacturers were basing model year designations on the date of ultimate sale to retail purchasers. Id. The FTC was concerned that those practices might mislead buyers as to the date of manufacture and may... hinder market forces that normally lead to price cuts at the end of model years. Id. Four years later, in 1979, the FTC revised its Enforcement Policy Statement to add an exception for chassis or incomplete vehicles sold to motor home or recreational vehicle manufacturers who issue separate Certificates of Origin for completed vehicles. Enforcement Policy Regarding Designation of Model Year of Motor Vehicles, 44 Fed.Reg. 30322 (May 25, 1975), codified at 16 C.F.R. § 14.11 (1979). The 1979 Policy Statement exempted chassis and incomplete vehicle manufacturers from assigning a model year to their products as long as they put the words Model Year or Year on the Certificate of Origin, followed by NA or Not Applicable or None. Id. Shortly after it issued the 1979 Policy Statement, the FTC entered into consent agreements with most manufacturers of heavy duty trucks and other vehicles. See, e.g., Mack Trucks, Inc., 94 F.T.C. 236 (1979); Chrysler Motors Corp., 94 F.T.C. 245 (1979). The consent agreements settled allegations that vehicle manufacturers both directly and through their dealers had misrepresented the model year of certain vehicles by redesignating Certificates of Origin and other documents to reflect the forthcoming year, rather than the model year when the vehicles had actually been manufactured. Id. The consent agreements tracked the provisions set out in the Commission's 1979 Policy Statement and expressly incorporated the exemption for chassis and incomplete vehicles that are not titled or registered and that have separate Certificates of Origin prepared by the final vehicle manufacturer. Id. In 1995, the FTC stopped publishing its Enforcement Policy Statement in the Code of Federal Regulations after determining that it was unnecessary and superfluous in light of the guidance provided by the 1979 consent agreements. [6] See Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements, 60 Fed.Reg. 42031-02 (Aug. 15, 1995) (no subsequent codification). Federal regulations define model year as the year used to designate a discrete vehicle model, irrespective of the calendar year in which the vehicle was actually produced, provided that the production period does not exceed 24 months. 49 C.F.R. § 565.12(m). Since manufacturing recreational vehicles is a two-stage process for Gulf Stream, the chassis manufacturer (Freightliner in this case) does not have to assign a model year to the chassis in its Certificate of Origin. Gulf Stream may then assign a model year to the completed recreational vehicle that is within two years of the date in which the chassis was manufactured. See id. All of this just means that a final-stage manufacturer such as Gulf Stream can use a chassis manufactured in 2007 in a 2008 or a 2009 model year recreational vehicle. However, it does not mean that the rest of the principles outlined in the consent agreements are inapplicable to a final-stage manufacturer such as Gulf Stream. The consent agreements except only manufacturers of incomplete vehicles from having to designate a model year when otherwise required by state law. [7] Contrary to Gulf Stream's suggestion that the consent agreements apply only to single-stage manufacturers, there is nothing in the consent agreements, or in the regulations the consent agreements replaced, that suggests that multi-stage manufacturers operate under different constraints when it comes to assigning model years to a finished product than single-stage manufacturers. Gulf Stream does not argue, for example, that once it assigns a model year on a Certificate of Origin to one of its finished recreational vehicles, it may reassign or update the model year if it fails to sell the unit. This practice is clearly barred by the consent agreements for both single-stage and multistage manufacturers. More generally, the concerns reflected in the consent agreements and the supplanted regulationsthat reassigning or assigning model years upon sale can mislead buyers and hinder market forces that lead to price cuts at the end of model yearsare the same whether the manufacturer is a single-stage manufacturer or final-stage manufacturer selling a finished product. The Andersons claim (and Gulf Stream does not dispute) that Gulf Stream manufactured the Tourmaster at issue here in response to an order dated September 29, 2007 requesting a 2008 model Tourmaster with the then-standard 360 horsepower engine. The chassis of the Tourmaster at issue here was manufactured in 2007. The Tourmaster was completed before Gulf Stream switched to the production of 2009 model year vehicles in February 2008. Because the order was cancelled, the Andersons' Tourmaster sat at Gulf Stream's facility for several months until it was sold to Apple. When Gulf Stream sold the Tourmaster to Apple, it assigned the Tourmaster a 2009 model year. Gulf Stream contends that it was permitted to assign the Tourmaster a 2009 model year because, as a multistage manufacturer, it was allowed to put an older chassisthe 2007 chassis that came with a 360 horsepower enginein any finished recreational vehicle manufactured within two years (or up to 2009). See 49 C.F.R. § 565.12(m) (2008). But while manufacturing a split model year vehicle with an older chassis is permitted, Gulf Stream's argument overlooks the fact that it designed and completed the Tourmaster in its 2008 production cycle. As explained above, there is no exception in the consent agreements with respect to model year designations for the finished product of final-stage manufacturers. The consent agreements provide that a manufacturer cannot represent a vehicle in any document... or in any advertisement as being a particular model year unless the designation standards are uniformly applied throughout a model year to all vehicles of the same model assigned a model year designation. See Mack Trucks, 94 F.T.C. 236. Model year designations must be made in accordance with written designation standards which clearly identify the vehicles to which they apply and the starting dates when such standards take effect.  Id. (emphasis added). The model year assigned to a vehicle is to be determined by either the characteristics of the vehicle designated or by the date of manufacture. Id. Here, Gulf Stream did not follow either protocol because the characteristics of the Andersons' Tourmaster were not consistent with those of the 2009 model year Tourmaster, and the date of manufacture of the final product preceded Gulf Stream's 2009 model year production. We emphasize that we do not read the FTC's regulations to necessarily preclude Gulf Stream from using an older chassis in a newer vehicle or even the same chassis in a 2008 model and a 2009 model. It is common in the industry to manufacture split model year vehicles. See, e.g., Policy Positions of the American Association of Motor Vehicle Administrators, available at: http://www.aamva.org/aamva/ DocumentDisplay.aspx?id={3A9338F2-024D-460A-AB2B-F405394B9075} (last visited October 24, 2011). This makes sense in light of the delay involved in the multi-stage manufacturing process not present in the single-stage manufacturing process. See Federal Motor Vehicle Standards; Roof Crush Resistance, 76 Fed. Reg. 15903-01 (proposed Mar. 22, 2011) (to be codified at 49 C.F.R. pt. 571). What the regulations do not appear to contemplate, however, is for a manufacturer such as Gulf Stream to assign a 2009 model year to a vehicle designed for, with the characteristics of, and completed during, its 2008 model year production cycle. [8] Permitting such a practice could result in precisely the kinds of consequences the FTC sought to avoid: misleading buyers as to the date of manufacture and hindering market forces that lead to price cuts at the end of model years. We therefore conclude that the district court erred in concluding that federal regulations permitted Gulf Stream to designate the Andersons' Tourmaster as a 2009 model. We must still decide, however, whether the Andersons can proceed on their IDCSA claim. The IDCSA identifies nineteen deceptive acts that sellers may not engage in. IC 24-5-0.5-3(a). The Andersons contend that Gulf Stream violated the IDCSA's provision prohibiting oral or written representations to the effect that such subject of a consumer transaction is of a particular standard, quality, grade, style, or model, if it is not and the supplier knows or should reasonably know that it is not. IC 24-5-0.5-3(a)(2). The IDCSA classifies deceptive acts into incurable and uncured deceptive acts. An act is incurable and immediately actionable without notice to the seller if the seller committed the act with intent to defraud or mislead. Perry v. Gulf Stream Coach, Inc., 814 N.E.2d 634, 647 (Ind.Ct.App.2004). Otherwise, a deceptive act is actionable if it is uncured, that is, if the manufacturer does not respond within 30 days of receiving notice of the deceptive act, in writing, with an offer to cure. The Andersons contend that Gulf Stream committed an uncured deceptive act by stating on its website that the 2009 model year Tourmaster came standard with a 425 horsepower engine when their 2009 Tourmaster came with a smaller engine. They further argue that they sent a letter notifying Gulf Stream that this was a deceptive act on January 23, and that Gulf Stream did not respond until March 27, more than 30 days after the period provided in the IDCSA for uncured acts. Gulf Stream maintains that it did not engage in a deceptive act because the statement on its website was true when made, because it could lawfully designate the Tourmaster as a 2009 model, because it reserved the right in its website to make modifications, and because the Andersons received at least one document indicating that the Tourmaster had a 360 horsepower engine. As to Gulf Stream's first contention, the statement on the website that 2009 Tourmasters came with a 425 horsepower engine, which, according to the Andersons, induced them to purchase the Tourmaster, was inaccurate, at least with respect to the Andersons' 2009 Tourmaster. Nor, for the reasons explained above, are we convinced that federal regulations permitted Gulf Stream to designate the Tourmaster as a 2009 model. The reservation of rights also does not help Gulf Stream. It would not be reasonable to construe the statement that Gulf Stream reserves the right to make changes in prices, colors, materials, components and specifications and discontinue models to mean that Gulf Stream could, without apprising the consumer, change the size of something so fundamental to the vehicle as the engine, especially in light of the fact that a 425 horsepower engine was the only option listed for 2009 models. There are, however, disputed issues of fact surrounding the Andersons' receipt of the MCO that preclude granting summary judgment to either party. The Andersons allegedly received two MCOs indicating that their Tourmaster had a 360 horsepower engine. Apple also received several documents listing the 360 horsepower engine, but he did not give those to the Andersons, and he claims not to have realized that the Tourmaster came with a 360 horsepower engine. Gulf Stream argues that the Andersons cannot prevail because Gulf Stream disclosed the engine's horsepower in the MCO. But an MCO is not a document that is intended for consumers; it is intended for the state and includes the horsepower of the vehicle (listed as H.P. (S.A.E.)) among a list of other numbers that a consumer would not necessarily know how to decipher (such as VIN number, date, etc). The Andersons claim that even if they received the MCOs, they either did not see or did not understand the notation, and that the size of the engine was not included in any of the documents that a consumer would reasonably look to in order to learn about the features of a vehicle. Drawing all inferences in the Andersons' favor, their reliance on Gulf Stream's statements on Gulf Stream's website in forming a belief or expectation as to the size of the engine they were getting was reasonable, especially in light of the lack of any other consumer-oriented documentation stating otherwise. However, the Andersons are not entitled to summary judgment on this claim because whether the Andersons saw the MCO or should have understood from that document that the Tourmaster came with a 360 horsepower engine is a disputed question of fact for the jury. Gulf Stream also contends that the Andersons' IDCSA claim fails because the Andersons did not give proper notice under the IDCSA. But the cases Gulf Stream relies on are distinguishable. In both cases, the consumers did not apprise the seller of the alleged deceptive act. See A.B.C. Home v. Plummer, 500 N.E.2d 1257, 1261-62 (Ind.Ct.App.1986) (failed to identify the advertisement containing the allegedly deceptive statement); Lehman v. Shroyer, 721 N.E.2d 365, 368 (Ind.Ct.App. 1999) (consumer failed to identify that price advertised was deceptive). Here, in contrast, the Andersons' January 23 letter stated that: The Andersons ordered the RV, in large part, because it was advertised on Gulfstream's website as having a 425 HP [engine]. After delivery, the Andersons discovered that the RV had only a 360 HP engine. This was enough to put Gulf Stream on notice.