Date: 07-16-2008
Case Style: Kenneth E. Corder, Sr. v. Ford Motor Co.
Case Number: 07-5533
Judge: William W. Schwarzer
Court: United States Court of Appeals for the Sixth Circuit on appeal from the Western District of Kentucky, Jefferson County
Plaintiff's Attorney:
Defendant's Attorney:
Description: Kenneth Corder, Sr., brought this action against Ford Motor Company on behalf of himself and others similarly situated seeking damages under the Kentucky Consumer Protection Act (“KCPA”), Ky. Rev. Stat. Ann. § 367.100 et seq., restitution and other equitable and declaratory relief. Corder alleges that in May 2004 he purchased a Model Year 2004 F-250 Ford F-Series Super Duty Truck with a 6.0L Power Stroke Diesel engine and that he subsequently discovered that the truck he purchased contained a 2003.25 6.0L Power Stroke Diesel engine instead of the improved 2004 6.0L Power Stroke Diesel engine which Ford had installed in 2004 F-250 Series Super Duty trucks beginning in October 2003. Corder had waited to purchase the 2004 model of the truck because of widelyreported problems with the engine in the 2003 model. Corder alleges that the sale of a 2004 truck with a 2003 engine was a deceptive practice and unjustly enriched Ford.
After initial discovery, Ford moved for summary judgment. The district court granted the motion. It held that Ford’s actions were not unfair, false, misleading or deceptive. The court reasoned that the changes implemented in the 2004 engine did not result in an engine substantially different from that installed in Corder’s truck and that Ford’s failure to disclose the engine’s manufacturing history was not a material omission. It further held that Corder had failed to show that he had suffered “ascertainable loss of money or property” within the meaning of the KCPA. Finally, the court rejected the claim for equitable relief. Corder timely appealed.
ANALYSIS
We review a summary judgment de novo. Bennett v. City of Eastpointe, 410 F.3d 810, 817 (6th Cir. 2005). Summary judgment is appropriate where “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. Proc. 56(c). We “must view all evidence and draw all reasonable inferences in the light most favorable to the nonmoving party.” Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003).
I.
The KCPA prohibits “[u]nfair, false, misleading, or deceptive acts in the conduct of any trade or commerce.” Ky. Rev. Stat. Ann. § 367.170(1). The words “unfair, false, misleading or deceptive” are “defined in terms generally understood and perceived by the public.” Smith v. General Motors Corp., 979 S.W.2d 127, 131 (Ky. Ct. App. 1998). Kentucky courts construe the KCPA “broadly to effectuate its purpose of ‘curtail[ing] unfair, false, misleading or deceptive practices in the conduct of commerce . . . . ’” Commonwealth of Kentucky ex rel. Chandler v. Anthem Ins. Co., Inc., 8 S.W.3d 48, 54 (Ky. Ct. App. 1999) (quoting Commonwealth of Kentucky ex rel. Stephens v. North American Van Lines, Inc., 600 S.W.2d 459, 462 (Ky. 1979)). The Federal Trade Commission defines an act as deceptive under the analogous Federal Trade Commission Act if “first, there is a representation, omission, or practice that, second, is likely to mislead consumers acting reasonably under the circumstances, and third, the representation, omission, or practice is material.” In the Matter of Cliffdale Associates, Inc., 103 F.T.C. 110, 165 (1984).
We agree with Corder that there is sufficient evidence to raise a genuine issue of material fact regarding whether Ford’s sale of a 2004 model Super Duty truck with a 2003 6.0L V-8 Power Stroke diesel engine installed was an “unfair, false, misleading or deceptive” act. First, contrary to Ford’s argument that its engines do not have model years, there is substantial evidence from which a jury could find that Ford distinguished between the 2003 model and the 2004 model of the 6.0L V-8 Power Stroke diesel engine. The engine in the 2003 F-250 truck was notorious for its deficiencies which were widely publicized, including “leaky fuel injectors, oil leaks, broken turbochargers, wiring harness troubles, faulty sensors, defective exhaust gas recirculation valves and bad computers.” (Joint Appendix (“JA”) 848, 795.) Ford identified that engine internally as the 2003 engine, (JA 638, 640), and distinguished it from the 2004 engine in its internal documents. For example, a “Program Direction Letter” distinguished the “2004 6.0L diesel Engine” from the “03.25MY Diesel.” (JA 1337.) A Ford document titled “Extraordinary Measures for 2004MY Launch” referred to “03MY and other 04MY engines” (JA 2039) and
another document titled “6.0L Diesel Single Agenda for Quality - OVERVIEW” referred to “2004 veh. Model year w/ 2003 engines.” (JA 1335.) Ford documents also indicate that it initially planned to begin installing what it called “04 engines” in the 2004 model year trucks beginning in September 2003. (JA 1339.) A supervisor at International Truck and Engine, where the engines were manufactured, upon learning that Corder had purchased a 2004 truck, gave Corder a 2003 engine manual and a 2004 engine manual, indicating that they were different engines. (JA 946, 1053.)
There is also substantial evidence from which a jury could find that Ford made significant improvements in the 2004 engine. A 29-page memorandum created in July 2003 entitled “6L 2004 MY Issues and Resolution Plans” identifies and discusses in detail six categories of problems with the Power Stroke engine and proposes fixes for the 2004 model. (JA 1341-1370.) None of the problems and fixes appear to refer to compliance with EPA emissions requirements.
Ford’s internal memos contain repeated references to improvements in the 2004 engine. (JA 801-808, JA 2042.) One memo titled “Extraordinary measures for 2004MY Launch” states “all 04MY engines 100% tested . . . .” (JA 1309.) Ford admitted in interrogatory answers that the engine in Corder’s truck and other Super Duty trucks assembled before September 29, 2003 did not include at least 30 improvements that were included in the 2004 engine. (JA 857-865.) Ford documents also indicate that Ford planned an early release of the 2004 model year of the Super Duty truck as “’04 badge only” with installation of the 2004 engine delayed until the fall of 2003. (JA 1331 - 1337.)
A jury could find from this evidence that a reasonable purchaser would have considered the improvements Ford made to the 2004 engine material to his choice of truck.
In an analogous case, the Kentucky Court of Appeals held that a jury could find that the sale of a vehicle as new without disclosing its pre-sale repair history was a false, misleading or deceptive act under the KCPA. Smith v. General Motors Corp., 979 S.W.2d 127, 131 (Ky. Ct. App. 1998). Here, a jury could find that given the widely-known problems with the 2003 engine (JA 848, 795), a reasonable purchaser of a 2004 F-250 Super Duty truck would have expected that it did not contain a 2003 engine, and that the sale to Corder of a 2004 truck without disclosing that the truck contained a 2003 engine was a misleading and deceptive act.
We also disagree with the district court’s conclusion that Corder failed to show an “ascertainable loss of money or property.” Ky. Rev. Stat. Ann. § 367.220(1). The Kentucky courts have not specifically addressed what qualifies as an “ascertainable loss” under the statute.
However, in Smith, the Kentucky Court of Appeals reversed a summary judgment for General Motors, holding that “a fact finder might reasonably conclude that the sale of the van as ‘new’ without disclosure of its pre-sale history constituted a false, misleading or deceptive act.” 979 S.W.2d at 131. The court did not find it necessary to consider whether Smith had suffered “ascertainable loss.”
The result in Smith is consistent with the result reached by other courts. In an analogous case involving the purchase of an automobile that plaintiff claimed was not as represented, the Connecticut Supreme Court held, interpreting Connecticut’s unfair trade practices act, that “the words ‘any ascertainable loss’ . . . do not require plaintiff to prove a specific amount of actual damages in order to make out a prima facie case.” Hinchliffe v. American Motors Corp., 440 A.2d 810, 813-14 (Conn. 1981). The court reasoned:
Moreover, the inclusion of the word “ascertainable” to modify the word “loss” indicates that plaintiffs are not required to prove actual damages of a specific dollar amount. “Ascertainable” means “capable of being discovered, observed or established.” . . . . . . Whenever a consumer has received something other than what he bargained for, he has suffered a loss of money or property. That loss is ascertainable even though the precise amount of the loss is not known. Id. at 814.
And in Scott v. Western Int’l Surplus Sales, Inc., 517 P.2d 661, 663 (Or. 1973), the court held that the plaintiff, who sought statutory damages under the Oregon Consumer Protection Act, had sufficiently established an “ascertainable loss,” saying:
[T]he plaintiff did not have to prove in what amount the value of the tent [he had purchased] was reduced because it was not as represented. He merely had to prove he suffered some loss. Here, Corder produced evidence from which a jury could find that the truck he purchased was not as a reasonable consumer would expect it. Though he purchased a 2004 model Super Duty truck, the engine it contained was a 2003 engine that lacked the improvements in the 2004 engine.
Moreover, Corder offered expert evidence of a professional appraiser who opined that a more recent model year Ford F-Series Super Duty truck with a 6.0L Power Stroke diesel engine generally is more valuable than earlier models. He opined that “a consumer like [plaintiff] can reasonably expect a later model vehicle will contain improvements, including engine improvements over a previous model year, and would associate an engine with a given model year as having characteristics associated with that year.” (JA 2159.) We conclude that Corder has presented evidence from which a jury could find that he suffered an “ascertainable loss of money or property” within the meaning of the KCPA.1
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http://www.ca6.uscourts.gov/opinions.pdf/08a0410n-06.pdf
Outcome: The district court also dismissed Corder’s claims for unjust enrichment and money had and received, reasoning that there is no support for the contention that Ford’s retention of any benefit would be unjust. We agree with that disposition. As the district court observed, quoting Luithly v. Cavalier Corp., 181 F.3d 102, at *4 n.2 (6th Cir. 1999), such an action lies “when money has been received by one party that, in justice and equity, belongs to another.” This is not such a case.
For the reasons stated, we VACATE the judgment of the district court and REMAND for further proceedings.
Plaintiff's Experts:
Defendant's Experts:
Comments:
