7th Cir. Reinstates Class Action for Volvo Plug-In Hybrid Range Misrepresentations

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In the Seventh Circuit Court of Appeals’ recent opinion in Laurens, et al. v. Volvo Cars of North America, LLC, et al., the court relied on the notion of common sense (and basic contract formation principles) to cudgel Volvo’s and other automakers’ attempts to moot consumer class actions through the trend of “picking off” plaintiffs. Case No. 16-3829 (7th Cir. Aug. 22, 2017) (slip op. available here). At issue was the advertised mileage capability of a Volvo Model XC90 T8, a hybrid plug-in SUV, when running solely on battery power. The plug-in hybrid was sold at a $20,000 premium as compared to its non-hybrid counterpart, the XC90.

The court referred to the process of “picking off plaintiffs” as a “theme” with many variations, several of which “have been tried and have failed.” Slip op. at 1. In Laurens, Volvo contended, in a motion to dismiss under Fed. Rule 12(b)(1), that Khadija Laurens, one of the now-plaintiffs, lacked standing because Volvo had sent her a letter offering complete relief before she had been added to the current lawsuit (her husband, Xavier, was the initial named plaintiff). The district court agreed that the defendant’s offer had redressed her injury before she became a party to the suit, and thus dismissed the action.

In a refreshingly straightforward analysis, applying basic contract law, the Court of Appeals held that simply making an unaccepted pre-litigation offer of redress does not result in a loss of Article III standing. As the court explained: “Any first-year law student knows that contract formation requires offer, acceptance and consideration. . . .  Consider what this case would look if the parties were reversed. [Plaintiff] could not argue that she had the right unilaterally to compel an unwilling Volvo to trade a full refund in exchange for her claim.” Slip op. at 11-12. This latest variety of attempting to moot a class action via unaccepted pre-litigation offers met a demise similar to Campbell-Ewald, where the Supreme Court of the United States clearly found that a case was not mooted by an unaccepted Rule 68 offer of judgment; thus, the plaintiff still had standing in a Telephone Consumer Protection Act case. Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016).

After the appeals court reversed and remanded the Laurens action, the district court applied the ruling and, for the most part, denied the defendant’s motion to dismiss. Such uncomplicated analysis by the Seventh Circuit is welcome in the often convoluted world of Article III standing.

Authored by:
Tarek Zohdy, Associate