Sticker Shock – Did a Typo Cost Toyota $36,000 for Violating Washington’s Consumer Protection Act?

From the desk of Kyle Riley: 

To prevail on a private claim under Washington’s Consumer Protection Act (“CPA”), a plaintiff must establish that a company engaged in an unfair or deceptive act or practice. At times, lower courts in Washington have read a materiality requirement into this, which makes the plaintiff’s ability to prevail more difficult. In this opinion, the Washington Supreme Court finally set the record straight on whether a showing of materiality is required under a CPA claim.

Claims Pointer:

The Washington Supreme Court clarified that materiality is not necessary to establish a CPA claim. Rather, a plaintiff must only establish that there was an unfair or deceptive act or practice that had the potential to deceive substantial portions of the public.

Young v. Toyota Motor Sales, 196 Wn.2d 310 (September 24, 2020)

Facts:

In this case, the plaintiff, Duane Young (“Young”), purchased a new 2014 Toyota Tacoma that came with a limited package of additional features from a dealership in Washington. Before his purchase, Young conducted research about the vehicle using Toyota’s website, Toyota’s advertising, and the Monroney label. A Monroney label is a sticker that is required to be displayed on all new vehicles in the United States and lists certain official information about the vehicle. All these platforms incorrectly contained the information that the 2014 Toyota Tacoma had an outside temperature gauge displayed on the rearview mirror. Young negotiated the purchase of his vehicle over the phone and scheduled a time to pick up the truck. About a week before Young was supposed to pick up his vehicle, Toyota realized that they had incorrectly characterized the specifications of the vehicle, specifically information pertaining to the outside temperature gauge. To fix this incorrect information, Toyota notified regional representatives of the error, printed new Monroney labels, and updated their website. Additionally, Toyota offered $100 in compensation to everyone who had purchased a truck that was incorrectly advertised to have an outdoor temperature gauge display. Notably, the manufacturing cost of installing the gauge into a vehicle was about $10. Young refused Toyota’s offer of compensation and all subsequent offers, including an offer to replace the display. Instead, Young filed a suit against Toyota under Washington’s Consumer Protection Act (“CPA”).

A bench trial was held, and the court found for Toyota. Young appealed this decision, but the court of appeals affirmed the trial court’s ruling. In its opinion, the court of appeals stated that in order to prove the first element of a CPA claim, a plaintiff must show that the practice or act was unfair or deceptive and the misstatement of fact was material. The court of appeals found that the price of the $10 gauge was immaterial as compared to the $36,000 vehicle. Therefore, Young had failed to establish the materiality of the misstatement.

Law:

Washington’s Consumer Protection Act was enacted to prevent large companies from taking advantage of consumers through deceptive trade practices. To prevail on a private claim under the CPA, a plaintiff must establish: (1) an unfair or deceptive act; (2) occurred in trade or commerce; (3) affects the public interest; (4) an injury to the plaintiff’s business or property; and (5) causation. To establish the first element, a plaintiff must show that the unfair or deceptive act had the capacity to deceive. The act did not actually have to deceive anyone, nor does there have to be an intention to deceive behind the act. If a materiality requirement is read into the first element, as the court of appeals believed it should be, a plaintiff would have to show that the company made a material misrepresentation that had the potential to deceive the public. Generally, an act or practice is considered material if the misrepresentation was likely to affect the consumer’s conduct or decision. In other words, a misrepresentation would be material if the consumer would have made a different decision without the misrepresentation.

The Washington Supreme Court did not agree with the court of appeals and ruled that materiality does not have to be established to prevail on the first element of a CPA claim. The court then addressed where this misconception about materiality might have come from. The Washington Supreme Court noted that they have mentioned materiality as part of the first element in past cases. However, when the court did so, it was just to state that establishing materiality might be sufficient to prove the element, but the court has never held that materiality is necessary. Additionally, the court noted that the Washington CPA was modeled upon federal consumer protection laws and materiality might be required under those similar federal laws. Despite this, Washington has never adopted the requirement of materiality.

Analysis:

Ultimately, the Washington Supreme Court found that Young had succeeded in establishing the first element of his CPA claim. Young had shown that Toyota’s misrepresentation about the outside temperature gauge had the capacity to deceive a substantial portion of the public and the court deemed that sufficient to establish the first element. However, the court ultimately affirmed the court of appeal’s decision on grounds that Young had not established causation and therefore, in the end Toyota prevailed.

The Big Picture:

In this opinion, the Washington Supreme Court explicitly and specifically rejected the requirement of materiality when establishing the first element of a private CPA claim. After this decision, lower courts should now apply a correct and uniform standard when determining if a plaintiff has made a successful showing of an unfair or deceptive act or practice. This clarification means that plaintiffs will consistently have an easier time in establishing the first element of a private CPA claim. Notably though, for CPA claims, if a plaintiff fails to establish a single element, that failure is fatal to the entire claim. Therefore, just because the first element might be easier to establish, plaintiffs must still make an adequate showing on all four of the other elements in order to prevail.