Kensington Antitrust Advisors Group

In McGarvey et al. v. Penske Automotive Group Inc. et al., the Third Circuit refused to reinstate a proposed class action against Penske Automotive Group Inc., finding consumers failed to establish that the warranty on a vehicle anti-theft system included an unlawful tying arrangement.  The warranty in question provided that in the event a vehicle covered by the anti-theft system is stolen, the customer will get a credit of up to $7,500 toward the purchase of a replacement vehicle at a specific dealership listed on the warranty.  In their suit, plaintiffs claimed that the warranty violated the Magnuson-Moss Warranty Act (MMWA)’s anti-tying provision because it required consumers to purchase a replacement vehicle from a particular dealership in order to benefit from the warranty.  The court disagreed and held that the warranty did not violate consumers’ “clearly established legal right” under the MMWA because the act fails to spell out exactly what that right is.  According to the court’s opinion, “the MMWA’s legislative history and FTC guidelines suggest that the MMWA prohibits tying arrangements for articles or services that are unrelated to redeeming the warranty benefit.  However, as in cases like this one, where the condition applies to parts or services that the consumer must pay for in the process of redeeming the warranty benefit, it is unclear whether the prohibition of tying arrangements applies.”