On December 2, the Ninth Circuit reversed the District Court’s summary judgment in favor of Ford Motor Company in a putative class action entitled Daniels v. Ford Motor Company. The Daniels plaintiffs alleged that Ford breached implied and express warranties and committed fraud in the sale of model year 2005 to 2011 Ford Focus vehicles containing alleged rear suspension defects. The Court’s decision continues California’s trend of “expand[ing] consumer protection and remedies” and comes in the wake of hundreds of recently filed lawsuits involving alleged vehicle transmission and emission defects.
The Ninth Circuit panel provided the consumers with several favorable holdings: (1) The district court erred when it declined to follow the infamous California state court appellate decision, Mexia v. Rinker Boat Col, 95 Cal.Rptr. 3d 285, 295 (Ct. App. 2009) (holding that “latent” defects may breach the implied warranty even when they are not discovered within the implied warranty’s duration), and reversed the summary judgment on the Song Beverly Consumer Warranty Act claims of the plaintiffs, (2) The Court interpreted the terms of Ford’s express warranty in favor of the consumers, and (3) Plaintiffs created a genuine dispute of material fact on their fraud claims as to whether they relied on Ford’s alleged omissions in purchasing the Focus.
Daniels provides a clear path for plaintiffs to get past summary judgment in vehicle defect cases. Daniels underscores the importance of compelling arbitration of consumer disputes and completing an investigation within thirty days of a consumer’s claim. When the facts indicate that the consumer may prevail, making a correction offer - such as an offer of rescission when appropriate – within thirty days of receiving a Song Beverly or Consumers Legal Remedies Act notice will negate the attorneys’ fees award and discourage frivolous claims.