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Citing an earlier U.S. Supreme Court ruling — and stating it was relying on information known to “any first-year law student” — a federal appeals court has reinstated a putative class action lawsuit against Volvo Cars of North America Inc. that claims advertising for its hybrid car is misleading.
Xavier and Khadija Laurens “overcame the sticker shock” and bought a plug-in hybrid car, model XC90 T8, manufactured by Rockleigh, New Jersey-based Volvo Cars of North America, a unit of Gothenburg, Sweden-based Volvo Car Corp., paying $83,475, or $20,000 more than its “gas-only sibling,” according to Tuesday’s ruling by the 7th U.S. Circuit Court of Appeals in Chicago in Xavier Laurens and Khadija Laurens v. Volvo Cars of North America L.L.C. and Volvo Car USA L.L.C.
“The Laurenses quickly realized that the car they bought fell short of the car the ads had promised,” said the ruling. Volvo’s advertisements had claimed the T8’s battery range was 25 miles, but instead it “averaged a puny eight or ten miles of battery-only driving, far below the promised distance,” said the ruling.
Xavier Laurens filed a putative class action lawsuit in U.S. District Court in Chicago, charging Volvo’s misleading advertising caused him to pay the extra money for the car’s hybrid version. “A wrinkle arose,” however, when it turned out only Khadija Laurens was listed on the car’s purchase agreement.
In June 2016, the couple received a letter offering Ms. Laurens a full refund. The next day, Volvo moved to dismiss the suit, arguing Mr. Laurens lacked standing, and that Ms. Laurens was not at the moment a party to the litigation.
When Ms. Laurens was added to the complaint, Volvo responded with a motion to dismiss, stating she did not have standing to sue because the company had offered her complete relief before she filed suit. The District Court agreed with Volvo and dismissed the case.
A unanimous three-judge panel of the 7th Circuit reinstated the case, with a majority and concurring opinion.
“The idea of a theme and variations is a common one in music,” said the ruling. “It should be in law, too. Here we return to the familiar theme of a defense effort to pretermit a proposed class action by picking off the named plaintiff’s claim.”
The ruling states the U.S. Supreme Court’s ruling in Campbell-Ewald Co. v. Jose Gomez is “instructive.” In that 2016 case involving the Telephone Consumer Protection Act, the high court held “an unaccepted settlement offer has no force.”
“Campbell-Ewald’s core lesson is that unaccepted contract offers are nullities; settlement proposals are contract offers; and therefore, unaccepted settlement proposals are nullities. Nothing about that logic turns on whether a suit has been filed,” said the ruling.
“Any first-year law student knows that contract formation requires offer, acceptance and consideration,” the ruling said. “Whether we characterize the deal Volvo was proposing as a swap of a car for money … or a swap of a claim for money ... until there is an acceptance there is no contract,” said the panel, in reinstating the litigation and remanding the case for further proceedings.
(Reuters) — Pacific Management Investment Co. will pay $20 million to settle charges it misled investors about the performance of a top exchange-traded fund it manages, U.S. regulators said Thursday.