Samsung & Lowe’s|Are no Energy Stars

(CN) - Samsung and Lowe's cannot dismiss claims they used Energy Star logos to sell refrigerators at higher prices though they did not meet federal energy-efficiency standards, a federal judge ruled.

Lead plaintiffs Lynne Avram and Margaret Lark each bought Samsung model RF26VAB refrigerators, bearing the U.S. Department of Energy's (DOE) Energy Star label, from Lowe's Home Centers in Scottsdale, Ariz. and Maryland in 2009.

Although the allegedly energy-efficient fridges were pricier than others - $1,200 to $2,100, including a substantial premium - they believed they would save money in the long run by reducing electricity bills.

Just a few months later, however, on Feb. 18, 2010, the DOE alerted Samsung that the refrigerators did not meet the Energy Star efficiency requirements under the Energy Policy Act of 2005.

After Samsung's own testing failed to persuade the department otherwise, the DOE referred the matter to the Environmental Protection Agency, and Samsung eventually agreed to stop manufacturing and selling the fridges.

Avram and Lark nonetheless filed class actions against Samsung Electronics America and Lowe's Home Centers in late 2011 and early 2012; the cases were consolidated in the District of New Jersey on June 20, 2012.

They assert claims for breach of express warranty and implied warranty of merchantability, violations of the Magnuson-Moss Warranty Act, unjust enrichment, and consumer fraud under New Jersey and Maryland law.

Samsung and Lowe's moved to dismiss, arguing that the warranty claims are preempted by the Energy Policy and Conservation Act of 1975.

U.S. District Judge Kevin McNulty partially denied the motions Thursday, holding that although manufacturers are required to disclose energy consumption figures under the National Appliance Energy Conservation Act, Samsung and Lowe's did not have to affix the Energy Star logo to their noncompliant products.

"Hewing to the text of the provision, as I must, I find that Avram's and Lark's claims are not preempted," McNulty wrote. "The Energy Star program is voluntary; the associated disclosures of energy efficiency are not 'required to be made' by statute. Had Congress intended to preempt warranty claims as to all such disclosures, it could simply have stated that 'no disclosure made under the provisions of this part creates a warranty.' But it did not; it limited the preemptive effect to disclosures 'required to be made' under the statute. I cannot assume that Congress's insertion of the words 'required to be' was accidental, or that the words themselves are superfluous and meaningless."

McNulty tossed Samsung and Lowe's claim that the Energy Star logo was not part of the basis of the bargain.

"Avram, however, alleges that she had decided to purchase only a refrigerator that sported the Energy Star label," McNulty wrote. "While Lark did not limit her search in the same way, one can reasonably infer from her complaint that she knew the Energy Star label was on the refrigerator, understood its meaning, and paid a higher price based on it. Defendants did not [and] indeed, at this procedural stage, probably could not rebut the allegations by proving that Avram and Lark were not in fact misled. That is not to say that such a rebuttal could not eventually be made, but, at this stage, I find that Avram and Lark have stated a claim for breach of express warranty."

The judge dismissed Avram's breach of the implied warranty of merchantability and the unjust enrichment claims against Samsung, as well as the state consumer fraud claims.

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