§63.12 Misrepresentation

The Case: Ladd by Ladd v. Honda Motor Co. , 939 S.W.2d 83 (Tenn. Ct. App. 1996).

The Basic Facts: Child was injured in an all-terrain vehicle accident. He sued vehicle manufacturer on a misrepresentation theory.

The Bottom Line:

• "We turn next to Michael Ladd's claim that the Honda defendants had misrepresented the handling characteristics of all-terrain vehicles by advertising that they were safe enough to be operated by children. The Honda defendants assert that Michael Ladd cannot succeed with this claim without proving that they misrepresented the handling characteristics of the particular model of all-terrain vehicle involved in this case. Michael Ladd responds that his claim may rest on proof that the Honda defendants misrepresented the handling characteristics of all-terrain vehicles in general. We agree with Michael Ladd." 939 S.W.2d at 95-96.
• "In the early 1930s American courts began to hold sellers strictly liable for injuries to consumers who relied on the seller's misrepresentations concerning their product's character and quality. In one of the leading decisions, the Washington Supreme Court held that a manufacturer who advertised that its automobile's windshield was shatterproof was liable to a purchaser who was injured when a windshield shattered after being struck by a stone. Baxter v. Ford Motor Co., [12 P.2d 409, 412 (Wash. 1932)]. The American Law Institute included these decisions in [RESTATEMENT (SECOND) OF TORTS § 402B (1964)] which provides:

  One engaged in the business of selling chattels who, by advertising, labels, or otherwise, makes to the public a misrepresentation of a material fact concerning the character or quality of a chattel sold by him is subject to liability for physical harm to a consumer of the chattel caused by justifiable reliance upon the misrepresentation, even though
  
  (a) it is not made fraudulently or negligently, and
  
  (b) the consumer has not bought the chattel from or entered into any contractual relation with the seller."

  Id . at 97.
• "Despite being a 'corollary' of the widely accepted strict liability doctrine articulated in [RESTATEMENT (SECOND) OF TORTS § 402A (1964)], liability for innocent misrepresentation under Section 402B has been recognized in only a minority of jurisdictions. [1 Louis R. Frumer & Melvin I. Friedman, Products Liability § 2.05, at 2-76 & n. 88 (1996)]; Misrepresentation, 1 Prod.Liab.Rep. (CCH) p 1900, at 4991 (1993). One treatise has surmised that Section 402B has been overshadowed by the broad acceptance of Section 402A. [1 Frumer & Friedman, supra, § 2.05, at 2-76 to 2-80]." Id. at 97 (citation omitted).
• "The Tennessee Supreme Court first recognized Section 402B claims thirty years ago, Ford Motor Co. v. Lonon, [398 S.W.2d 240, 250 (Tenn. 1966), rev'd on other grounds, First Nat'l Bank v. Brooks Farms, 821 S.W.2d 925, 931 (Tenn. 1991)], and has recently reaffirmed its decision. Ritter v. Custom Chemicides, Inc., [912 S.W.2d 128, 131-32 (Tenn. 1995)]. The General Assembly likewise included Section 402B claims in the Tennessee Products Liability Act of 1978. See [Tenn. Code Ann. § 29-28-102(6) (1980)]." Id.
• "A claim based on Section 402B is entirely distinct from a Section 402A claim. It does not condition liability on the product being defective or unreasonably dangerous. Ford Motor Co. v. Lonon, [398 S.W.2d at 250]; [Tenn. Code Ann. § 29-28-105(c) (1980)]; [1 Frumer & Friedman, supra, § 2.05, at 2-79 n. 91]. Rather, it focuses on whether the product conforms to the manufacturer's express statements about the product. Klages v. General Ordnance Equip. Corp., [367 A.2d 304, 310-11 (Pa. Super. Ct. 1976)]. In order to create liability under Section 402B, there must be proof of a misrepresentation of a material fact, made to the public, with respect to the character and quality of the product, which is false and upon which the consumer is expected to justifiably rely. [RESTATEMENT (SECOND) OF TORTS § 402B]; [1 Frumer & Friedman, supra, § 2.05, at 2-80 to 2-83]. The representations must be more than mere statements of opinion or the kind of loose general sales talk commonly referred to as 'puffing.' [RESTATEMENT (SECOND) OF TORTS § 402B cmt. g]." Id.
• "The Tennessee Products Liability Act of 1978 includes causes of action based on Section 402B. [Tenn. Code Ann. § 29-28-102(6)]; First Nat'l Bank v. Brooks Farms, 821 S.W.2d at 931. Accordingly, causes of action for misrepresentation must be couched in the terms used in the products liability statutes rather than the terms used in the [Restatement]. Tennessee's product liability statutes apply to 'products' which include 'any tangible object[s] or goods produced,' rather than to 'chattels.'^FN10 [Tenn. Code Ann. § 29-28-102(5)].

  FN10 The [RESTATEMENT (SECOND) OF TORTS] used the term 'chattel' in Section 402B. We see no meaningful distinction between the terms 'chattel' and 'product' which are frequently used interchangeably. Adhering to the language of the Tennessee Products Liability Act of 1978, we will continue to use the term 'product.'"

  Id . at 98.
• "We must still determine whether the term 'product' refers only to a specific model or brand or whether it may refer more generally to similar types of goods. The Honda defendants insist that 'product' should be limited to a specific model or item because actions based on Section 402B derive from actions on an express warranty and an express warranty must be model-specific. While the [Restatement] recognizes the concept of misrepresentation as a non-contractual express warranty, it also points out that this warranty 'is at least a different kind of warranty from that involved in the ordinary sale of goods ... and is subject to different rules.' [RESTATEMENT (SECOND) OF TORTS § 402B cmt. d]." Id.
• "When the Tennessee Supreme Court approved causes of action based on Section 402B, it noted that it viewed the claim as one based on a misrepresentation theory rather than a warranty theory. Ford Motor Co. v. Lonon, [398 S.W.2d at 248]. Likewise, liability under the Tennessee Products Liability Act of 1978 includes 'all actions brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging or labeling of any product' notwithstanding whether the claim is predicated on contract, warranty, tort, or misrepresentation. [Tenn. Code Ann. § 29-28-102(6)]. Based on these authorities, we conclude that a products liability cause of action based on innocent misrepresentations concerning the character or quality of a product is not subject to the same limitations that might otherwise be applicable to actions based on an express warranty relating to a specific product.^FN11

  FN11 We need not decide here whether actions based on express warranties must always be model-specific. We note, however, that the seminal case of Baxter v. Ford Motor Co., from which [RESTATEMENT (SECOND) OF TORTS § 402B] was developed, involved a representation concerning all Ford automobiles, not just a specific model."

  Id .
• "We have been unable to find any cases construing Section 402B that discuss the definition of 'product' or 'chattel.' Three cases addressed evidentiary issues similar to the ones involved in this case, but none of these cases discussed the admissibility of advertisements in terms of the scope of liability under Section 402B. Two decisions excluded advertisements about a different model of a product. In one case involving a claim of misrepresentation concerning the safety of a Jeep CJ-5 under certain driving conditions, the court excluded television commercials depicting a Jeep Cherokee. Haynes v. American Motors Corp., [691 F.2d 1268, 1270 (8th Cir. 1982)]. In the other case, the court held that a sales brochure containing pictures and representations about school buses was not relevant to a claim that the same manufacturer had made misrepresentations about its activity buses. Collins v. Wayne Corp., [621 F.2d 777, 787 (5th Cir. 1980)]." Id.
• "Contrary to these cases, the Iowa Supreme Court held that advertisements of a different model of automobile were admissible to prove a misrepresentation claim. In a case involving a 1968 Chevelle, the trial court permitted the introduction of advertisements of the Chevelle from 1967, 1969, and 1970 because the purchaser 'ha[d] tied in these ads in with the same automobile that he did purchase.' Jacobson v. Benson Motors, Inc., 216 N.W.2d 396, 402-03 (Iowa 1974)." Id.
• "Each of these cases was essentially resolved on relevancy grounds. The opinion in Jacobson v. Benson Motors, Inc. indicates that the plaintiff had demonstrated that the different models were essentially similar. The plaintiff in the Collins v. Wayne Corp. case apparently did not make a similar showing and did not rely on representations that applied to both activity buses and school buses. We cannot tell from the Haynes v. American Motors Corp. opinion whether the plaintiff attempted to demonstrate that the models were similar or that the misrepresentations applied to more than one model." Id. at 98-99.
• "None of these cases hold as a matter of law that liability under Section 402B is limited to misrepresentations about a particular model. We have cited them simply to show that courts deciding similar issues to the one involved in this case have based their decisions on the ad hoc basis of relevancy. None of these cases undertook to construe the word 'chattel' or 'product' under Section 402B. Lacking specific direction from either Section 402B, the Tennessee Products Liability Act of 1978, or the case law from this or other jurisdictions, we turn to the underlying purposes of Section 402B to determine whether 'product line misrepresentations' are actionable under Section 402B." Id. at 99.
• "Section 402B addresses a manufacturer's liability for innocent misrepresentations made through 'advertising, labels, or otherwise.' It was the law's response to the increasing use of television, radio, and other advertising media to extol the worth, quality, and benefits of various products in glowing details and terms. Randy Knitwear, Inc. v. American Cyanamid Co., [181 N.E.2d 399, 402 (N.Y. 1962)]; Rogers v. Toni Home Permanent Co., [147 N.E.2d 612, 615-16 (Ohio 1958)]. It recognizes that commercial advertising of products is often the guiding force in shaping consumers' expectations about a product. Leichtamer v. American Motors Corp., [424 N.E.2d 568, 578 (Ohio 1981)]; Inglis v. American Motors Corp., [197 N.E.2d 921, 924 (Ohio 1964), aff'd, 209 N.E.2d 583 (Ohio 1965)]." Id.
• "Accordingly, Section 402B provides a basis for holding manufacturers accountable for the public's reliance on the representations in their advertisements about the character and quality of their products. Consumers should be able to rely on representations in advertisements for an entire product line in the same way that they rely on advertisements for particular models in a product line. Thus, manufacturers should not be permitted to insulate themselves from liability under Section 402B simply by using general advertisements of an entire product line. Accordingly, we see no reason why manufacturers should not be held liable in actions based on Section 402B if their general advertisements of a product line contain representations of the character or quality of particular models in the product line and if the other conditions for liability under Section 402B have been met." Id.
• "The Honda advertising introduced by Michael Ladd extolled the use of all-terrain vehicles in general. It contained representations concerning the safety of all-terrain vehicles and, without being model-specific, portrayed all-terrain vehicles as being suitable for use by the entire family--including small children. Thus, we see no reason to shield the Honda defendants from liability under Section 402B for representations in their advertising about all-terrain vehicles in general if the general advertising contained misrepresentations applicable to all Honda all-terrain vehicles, including the specific all-terrain vehicle Michael Ladd was operating when he was injured." Id.
• "The Honda defendants asserted two principal defenses at trial against Michael Ladd's misrepresentation claim. First, they argued that their advertisements did not contain the type of misrepresentations of the character or quality of their product that would subject them to liability. Second, they claimed that Michael Ladd did not prove his misrepresentation claim because Mr. Givens did not rely on Honda's advertisements when he purchased his all-terrain vehicle. We find that neither of these defenses was sufficient to prevent the case from being submitted to the jury." Id. at 99-100.
• "Liability for misrepresentation under [RESTATEMENT (SECOND) OF TORTS § 402B] arises only with regard to misrepresentations of material facts concerning the character and quality of the product in question. It does not arise from statements of opinion and, in particular, to the 'kind of loose general praise of wares sold which, on the part of the seller, is considered to be 'sales talk,' and is commonly called 'puffing.'' [Restatement (Second) of Torts § 402B cmt. g]. The Honda defendants asserted at trial that their advertisements depicting young children riding all-terrain vehicles were no more than puffing." Id. at 100.
• "'Puffing' refers to loose general statements made by sellers in commending their products. These statements embody exaggerations, the truth or falsity of which cannot be determined easily, that amount to no more than an expression of the seller's opinion about the character or quality of the product. Loula v. Snap-On Tools Corp., [498 N.W.2d 866, 868 (Wis. 1993)]. Buyers have no right to rely on these statements. Thus, a seller's characterization of an automobile as a 'dandy' or a 'good little car' or the 'pride of our line' or the 'best in the American market' will not give rise to liability under Section 402B. See [RESTATEMENT (SECOND) OF TORTS § 542 cmt. e (1976)]." Id.
• "The courts have generally been cautious about a seller's claim that its representations were mere puffing. Thus, the question of whether a particular statement amounts to an actionable misrepresentation will generally be left to the jury whenever the circumstances indicate that the buyer reasonably understood that he or she was receiving something in the way of an assurance as to specific facts. [W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 109, at 757 (5th ed. 1984)]. The courts are also more inclined to send close cases to the jury when the representation at issue relates directly to the product's safety. Hoffman v. A.B. Chance Co., [346 F.Supp. 991, 992 (M.D. Pa. 1972)] (representation that it was unnecessary to have another person in the cab when operating the tractor); Hauter v. Zogarts, [534 P.2d 377, 381 (Cal. 1975)] (representation that a golf training device was 'completely safe [because the] ball will not hit [the] player'); but see Hoffman v. A.B. Chance Co., [339 F.Supp. 1385, 1388 (M.D. Pa. 1972)] (statement that the product provided 'unprecedented safety' was puffing)." Id.
• "The Honda defendants rely heavily on the Washington Supreme Court's holding that television commercials describing a mini-trail bike as 'a very good bike for children' and showing children riding mini-trail bikes were mere puffing. Baughn v. Honda Motor Co., [727 P.2d 655, 668 (Wash. 1986)]. We do not find the Baughn decision to be persuasive in this case because it is factually distinguishable. The children in Baughn were operating a mini-trail bike on a public road despite warnings in the owner's manual and on a decal on the bike itself that the bike was for off-road use only. Their parents had also warned them repeatedly not to use mini-trail bikes for street riding because they might get hurt. While the television advertising at issue in the Baughn case depicted children riding mini-trail bikes, it did not depict them operating mini-trail bikes on a public street. Accordingly, the manufacturer's advertising at issue in Baughn did not create the impression in the minds of the children or their parents that mini-trail bikes could be operated safely on public streets." Id.
• "In this case, Michael Ladd presented proof that all-terrain vehicles could not be operated safely by any child under the age of sixteen, that Honda's advertisements represented that all-terrain vehicles could be operated by young children, and that these advertisements materially influenced the decision of his uncle and his father to permit him to operate the all-terrain vehicle. Thus, the facts of this case make out the necessary element of justifiable reliance that is missing in the Baughn case. They also demonstrate that the representations in the advertisements were material to the decision to permit Michael Ladd to operate the all-terrain vehicle." Id.
• "A misrepresentation claim should be submitted to the jury when the representation at issue may reasonably be interpreted either as an expression of opinion or as a statement of fact. Stamp v. Honest Abe Log Homes, Inc., [804 S.W.2d 455, 458 (Tenn. Ct. App. 1990)]; Mackie v. Fuqua, 14 Tenn.App. 176, 185 (1931). At the very least, the issue concerning whether Honda's advertisements showing entire families riding all-terrain vehicles amounted to a misrepresentation that children like Michael Ladd could safely operate all-terrain vehicles should be decided by a jury." Id. at 101.
• "The Honda defendants also asserted that Michael Ladd did not make out a Section 402B misrepresentation claim because he failed to produce evidence of reliance on their advertising. They pointed chiefly to Mr. Givens's testimony that he bought his Honda TRX 250 not because of any of Honda's advertisements but because his brother had purchased the same vehicle. Even though Mr. Givens's decision to purchase an all-terrain vehicle is largely irrelevant, we will address the reliance issue briefly in light of our decision to remand this case for another trial." Id.
• "Section 402B requires that a consumer must justifiably rely upon the misrepresentation in order for liability to arise. The comments to Section 402B discuss the element of reliance and point out that liability under Section 402B will not arise 'where the misrepresentation is not known, or there is indifference to it, and it does not influence the purchase or subsequent conduct.' [RESTATEMENT (SECOND) OF TORTS § 402B cmt. j]. Thus the consumer's reliance may relate to other later conduct, not just to the consumer's decision to purchase the product." Id.
• "Michael Ladd does not dispute that Mr. Givens admitted that his decision to purchase the Honda TRX 250 was not influenced by Honda's advertisements. However, as we pointed out earlier in this opinion, Michael Ladd's claim does not involve Mr. Givens's decision to purchase the all-terrain vehicle but rather his decision to permit Michael Ladd to operate it. Mr. Givens testified specifically that seeing children on television riding all-terrain vehicles led him to believe that Michael Ladd could safely operate his all-terrain vehicle." Id.
• "Mr. Givens's reliance on Honda's advertising in deciding whether to permit Michael Ladd to operate his all-terrain vehicle satisfies Section 402B's reliance requirement. Michael Ladd is a 'consumer' for the purpose of Section 402B because he 'ma[de] use of the chattel in the manner which a purchaser may be expected to use it.' [RESTATEMENT (SECOND) OF TORTS § 402B cmt. I]. The reliance required by Section 402B need not be that of the injured consumer but may be that of the purchaser who passes the product along to the ultimate consumer. Baughn v. Honda Motor Co., 727 P.2d at 668; [RESTATEMENT (SECOND) OF TORTS § 402B cmt. j] (the reliance 'may be that of the ultimate purchaser of the chattel, who because of such reliance passes it on to the consumer who is in fact injured')." Id.