Free Motion in Limine - District Court of Arizona - Arizona

1 Negatu Molla (Bar No. 006254)

2 BOWMAN AND BROOKE LLP Suite 1600, Phoenix Plaza
3 2901 North Central Avenue

David W. Willams (Bar No. 022764)

Phoenix, Arizona 85012-2761
4 (602) 643-2300

Attorneys for Defendant Workhorse Custom Chassis
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UNITED STATES DISTRICT COURT
DISTRICT OF PHOENIX

LANE SENNETT,
Plaintiff,
v.

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No. CV04 0161 PHX ROS
DEFENDANT WORKHORSE CUSTOM CHASSIS, LLC'S MOTION TO

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WORKHORSE CUSTOM CHASSIS;
INC.,

FLEETWOOD MOTOR HOMES OF CALIFORNIA, INC. and

PRECLUDE REFERENCE TO
VIOLATIONS OF 16 C.F .R. §§ 700.5 AND 702.3 (Assigned to Honorable Roslyn O. Silver)

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Defendants.

17 Workhorse Custom Chassis, LLC ("Workhorse") by and through their counsel
18 undersigned moves in limine to preclude reference to any regulatory violations of the
19 Magnuson-Moss Warranty Act, including alleged violations of 16 C.F.R. §§ 700.5 and
20 702.3. This Motion is supported by the following Memorandum of Points and
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Authorities.
MEMORANDUM OF POINTS AND AUTHORITIES
i.

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INTRODUCTION

25 In her amended complaint, Plaintiff has alleged violations of two federal
26 implementing regulations of the Magnuson-Moss Warranty Act ("M MWA")

, 16 C.F.R.

27 §§ 700.5 and 702.3. Plaintiff has no standing to assert a cause of action under these

28 regulatory violations, and even if she did, she cannot show that Workhorse allegedly

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violated the regulations at issue. Therefore, Workhorse requests that the Court
preclude any reference to any alleged regulatory violations at triaL.
II.

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THERE IS NO CAUSE OF ACTION THAT EXISTS FOR A VIOLATION OF 16
C.F.R. § 700.5.

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16 C.F.R. § 700.5(a) states,

Under section 1 03(b), statements of representations of general policy concerning customer satisfaction which are not subject to any specific limitation need not be designated as full or limited warranties, and are exempt from the requirements of sections 102, 103 and 104 of the Act and rules thereunder. However, such statements remain subject to the enforcement provisions of section 110 of the Act and to section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45.

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Plaintiff is attempting to fashion a cause of action where one does not exist.

There is no cause of action that arises pursuant to Section 700.5 under any set of
facts. Section 700 of the Code of Federal Regulations sets forth the Federal Trade

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Commission's interpretations of the Magnuson-Moss Act. Section 700.5 is an
explanatory provision only; as such, it cannot be breached. This regulation simply
explains representations of general policy concerning customer satisfaction, e.g. "you

will be completely satisfied with this product" does not automatically subject the
declarer to all the provisions of the Act unless they have also provided a full or limited

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warranty. Section 700.5 simply explains how the MMWA should be applied, and to

whom. It is not a cause of action under any set of facts.
The United States Supreme Court has held that "(I)anguage in a regulation
may invoke a private right of action that Congress through statutory text created, but it may not create a right that Congress has not. . . it is most certainly incorrect to say

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that language in a regulation can conjure up a private cause of action that has not
been authorized by Congress." Alexander v. Sandoval, 532 U.S. 275, 291 (2001);
see also Cochise County v. Kirschner, 171 Ariz. 258, 262, 830 P.2d 470,474 ("(t)he

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language of the regulation. . . cannot confer any authority. . . beyond what appears
in the statute."); Stewart v. Bernstein, 769 F.2d 1088, 1093 n.6 (5th Cir. 1985) (lithe

federal regulations cannot themselves create a cause of action; this is a job for the

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legislature."); U.S. v. Doe,_701 F.2d 819, 823 (Cal. 1983) ("(w)here an administrative

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regulation conflicts with a statute, the statute controls."). Because Section 700.5

does not actually create a private cause of action, there can be no basis for
instructing the jury on this as a cause of action.

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Further, Defendant Fleetwood made this argument to the Court in its Motion for

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Summary Judgment, and based upon this position, the Court found that there was no
basis for Plaintiff to assert a cause of action under Section 700.5.
Even if the Court finds that a cause of action exists under Section 700.5,

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Plaintiff cannot show that Workhorse violated the regulation. One noted treatise on
warranty law notes that "general statements of customer satisfaction" refers to "such

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statements as 'satisfaction guaranteed or your money refunded' where there is no
other statement of limitation on the supplier's obligation." Barkley Clark & Christopher
Smith, ~Law of Proquct Warranties ~ 1. (Warren, Gorham & Lamont 1984).

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Workhorse has never made an offer to refund the customer's money if they are not

satisfied with their vehicle. It simply issued a written, limited warranty promising to
make repairs to defective components during the warranty period at no cost to the
customer, and that is the only thing that Plaintiff ever received. She testified during
her deposition that she never saw any advertisements or literature from Workhorse
prior to the purchase of her motor home, therefore, there is nothing that she saw that

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could independently create a "warranty" other than the limited warranty that
Workhorse provided with the chassis. See Deposition of Lane Sennett, pp. 131 :23132: 17, attached as Exhibit 1.
IIi.

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PLAINTIFF HAS NO FACTS TO SUPPORT A VIOLATION OF 16 C.F.R. § 702.3
Plaintiff claims that because Workhorse did not disclose any disclaimers or

limitations in its warranty prior to the time of sale it is in violation of 16 C.F.R. § 702.3

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and 15 U.S.C. § 2302. See Plaintiffs Amended Compl. 11 19. Workhorse did not

"sell" the subject vehicle to Plaintiff. Michael Hohl RV Center, an independent dealer,
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sold the subject vehicle to the Plaintiff. As a manufacturer and warrantor of the
chassis, 16 C.F.R. § 702.3 requires workhorse to provide with warranty materials to
sellers. The Federal Trade Commission has specifically commented on the pre-sale
availability of written warranty terms from the warrantor under the Magnuson-Moss Act.

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See 16 C.F.R. § 702.3. Under Section 702.3, there are express duties for both the

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seller, i.e., the independent dealer in this case and the warrantor, Workhorse. The
duties of the warrantor under 16 C.F.R. § 702.3(b)(1 )(A) are as follows:

A warrantor who gives a written warranty warranting to a consumer a
product actually costing the consumer more than $15.00 shall:
(i) Provide sellers with warranty materials necessary for such

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sellers to comply with the requirements set forth in paragraph (a) of this section, by the use of one or more of the following means:

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(A) Providing a copy of the written warranty with every warranted
consumer product: and/or

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(B) Providing a tag, sign, sticker, label, decal or other attachment to
the product, which contains the full text of the written warranty; and/or

warranty to the package, carton, or other container if that package, carton

(C) Printing on or otherwise attaching the text of the written

or other container is normally used for display purposes. If the warrantor elects this option a copy of the written warranty must also accompany the warranted product; and/or

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consumer product warranty. If the warrantor elects this option, a copy of the written warranty must also accompany each warranted product.

(D) Providing a notice, sign, or poster disclosing the text of a

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Plaintiff has never disclosed any evidence that Workhorse has failed to comply with
the requirements set forth above.

In PlaQens v. National RV, the district court rejected the plaintiffs' claims under

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Section 702.3 where they received a copy of the manufacturer's limited warranty and

the disclaimers were consciously labeled in the warranty. 328 F .Supp.2d 1068, 1076
(D. Ariz. 2004). The PlaQens court stated:
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Plaintiffs contend that the exclusions are invalid because they were not disclosed to them prior to making their purchase. However, as discussed

above, the warranty is plainly entitled "Limited Warranty" and the
exclusions are clearly set forth in the document. Moreover, Defendant provided the Limited Warranty to 10,000 RV Sales in compliance with 16

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C.F.R. § 702.3. The Court therefore rejects Plaintiffs' arguments
(internal citations omitted).

Id. at 1076.
Plaintiff received a copy of Workhorse's Limited Warranty. See Deposition of
Lane Sennett, pp. 134:135:5, attached as Exhibit 2. The Workhorse limited warranty
is plainly labeled as a limited warranty and the exclusions are clearly and

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conspicuously set forth therein.

Furthermore, disclaimers provided after the sale are binding on the consumer.

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For example, in Hill. et al. v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997), the
customer purchased a computer over the phone and was sent the computer and the
contract terms, including an arbitration provision, at the same time. The contract terms
provided that the customer could return the computer if dissatisfied with those contract

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terms within 30 days. The court found that the plaintiff accepted the contract, including

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the arbitration clause, by keeping the computer for more than 30 days, and therefore,
compelled arbitration according to the contract's terms. Id. at 1151. The Gateway

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court explained that impractical nature of ensuring that the entire document is read
prior to sale:

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Cashiers cannot be expected to read legal documents to customers

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before ringing up sales. If the staff...had to read the four-page statement
of terms...the droning voice would anesthetize rather than enlighten

potential buyers...Customers as a group are better off when vendors skip costly and ineffectual steps such as telephonic recitation, and instead use a simple approve-or-return device. Competent adults are bound by such

documents, read or unread.
105 F.3d at 1149.

Additionally, the court in Murphy v. Mallard Coach Co., specifically recognized
the absurdity of requiring a manufacturer to ensure that the warranty is provided to the
consumer during the negotiation process. The Court found:

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To accept the manufacturer's argument that in order to be part of the

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wherein the warranty card generally comes with the goods, packed in the box of boxed items or handed over after purchase of larger, non-boxed goods and, accordingly, is not available to be read by the consumer until

the contract, is to ignore the practical realiies of consumer transactions

basis of the bargain the warranty must actually be handed over during the negotiation process so as to be said to be an actual procuring cause of

after the item is actuall~ purchased and brought home. Indeed, such
interpretation would, in effect, render almost all consumer warranties an absolute nullty.

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Murphy v. Mallard Coach Co., 582 N.Y.S.2d 528,531, 179 A.D.2d 187, 193 (N.Y.
1992).

No evidence exists that Workhorse failed to comply with its obligations under

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16 C.F.R. § 702.3; therefore, Plaintiff should not be allowed to present alleged
evidence of a violation of Section 702.3 at triaL.
IV.

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CONCLUSION

For the reasons set forth above, Workhorse requests that the Court preclude
Plaintiff from presenting any evidence of an alleged regulatory violation at triaL.

RESPECTFULLY SUBMITTED this ci.6-ý!day of August, 2006.
BOWMAN AND BROOKE LLP

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By: /s/ David W. Wiliams

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2901 North Central Avenue

David W. Willams Suite 1600, Phoenix Plaza

Negatu Molla

Attorneys for Defendant

Phoenix, Arizona 85012-2761

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Workhorse Custom Chassis

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CERTIFICATE OF SERVICE

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I hereby certify that on the c2~day of August, 2006 I caused the attached
document to be electronically transmitted to the Clerk's Office using the CM/ECF

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System for filing and transmittal of a Notice of Electronic Filng to the following
CM/ECF registrants:
KROHN & MOSS, LTD

6 Jennifer Basola

7 111 W Monroe, Suite 711

8 Phoenix, AZ 85003
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Attorney for Plaintiff

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sf Judy Kaelin

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