Since the start of the year, voluntary recalls have led to early dismissals in several putative class action cases. Courts issuing these rulings have based their decision on one of two grounds: (1) the prudential mootness doctrine, and (2) lack of Article III standing.
The latest manufacturer to benefit from this trend is Ford Motor Company, who was sued by several consumers in the U.S. District Court for the Eastern District of Michigan over an alleged engine defect in certain 2020-2022 hybrid vehicles. In that case, Pacheco, et al. v. Ford Motor Co., No. 2:22-cv-11927 (E.D. Mich.), 14 consumer plaintiffs from 11 states alleged that the engines in their vehicles and all other class vehicles contained a defect that caused oil and fuel vapors to leak near ignition sources and created a risk of spontaneous fire. Plaintiffs asserted claims for fraud, unjust enrichment and breach of warranty, as well as violations of the Magnuson Moss Warranty Act and several consumer protection statutes on behalf of a nationwide class of purchasers and 11 state-specific subclasses.
A month before the suit, on July 7, 2022, Ford had initiated a recall of approximately 100,000 vehicles. As part of the recall, which was supervised by the National Highway Traffic Safety Administration (“NHTSA”), Ford instructed consumers to bring their affected vehicles into Ford dealerships to receive a free repair and/or reimbursement for any costs already incurred to obtain a repair. In moving to dismiss Pacheco, Ford relied heavily on this recall, arguing inter alia that plaintiffs’ claims were prudentially moot.
Last week, the U.S. District Court for the Eastern District of Michigan granted Ford’s motion to dismiss in its entirety based on the prudential mootness doctrine. Although the Court agreed with plaintiffs that this doctrine would not be appropriate if the recall remedy had left the plaintiffs without complete relief, it explained that just because the plaintiffs may have preferred another solution does not mean that the recall did not afford complete relief. For the case to survive, plaintiffs would have needed to show a “cognizable danger that the recall remedy supervised by NHTSA would fail.” Pacheco, et al., v. Ford Motor Co., No. 22-11927, 2023 WL 2603937 at *4 (E.D. Mich. Mar. 22, 2023). They had not.
The Court also rejected plaintiffs’ argument that they were nevertheless entitled to “overpayment” damages based on the diminished value of their vehicles. The Court explained that overpayment damages were not available because the recall remedy addressed the alleged defect upon which plaintiffs’ diminished value claim was based.
This latest ruling in Pacheco is another reminder that a recall can be a powerful tool in defending against litigation over allegedly defective products. The recent successes over the last few months, which span a variety of industries, suggest that prudential mootness and/or lack of standing arguments will become even more popular among manufacturers who have voluntarily recalled their products.