in the program, and an injunction preventing defendants from seeking to recover any judgment on the warranty agreements undertaken by plaintiffs. Reduced to its essentials, plaintiffs' claim appears to be (a) that defendants HWC and the Local Council induced plaintiffs to participate in the HOW program by representing that the warranties provided for under the program complied fully with the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq., and regulations promulgated by the Federal Trade Commission under that Act; (b) that such representation was false in that the terms of the HOW program providing for arbitration binding on the builder-warrantor differ from FTC regulations which provide only for non-binding arbitration, 16 C.F.R. § 703.5(i); and finally (c) that such false representations as to a material fact on which plaintiffs relied entitles plaintiffs unilaterally to rescind the contract. Seen in this way, plaintiffs' assertions represent a straightforward claim under the doctrine of fraud which generally provides that if the party seeking rescission has tendered an offer of rescission within a reasonable time which has been rejected, and is able to demonstrate a false representation of a material fact constituting an inducement to enter a contract, the court, exercising its equitable power, may rescind the contract-declaring it to be null and void. The court may then award restitution so that the parties are restored to the status quo ante as if the fraudulent contract had never been made. See Adelman v. CGS Scientific Corp., 332 F. Supp. 137, 146 (E.D.Pa.1971); Dunsmore v. Criville, 34 D. & C.2d 337, 83 Montg. 246 (1963).
Plaintiffs' cause of action is rooted in the law of Pennsylvania. The ground for characterizing this Pennsylvania case as one which "arises under the ... laws ... of the United States" is that an essential element of plaintiffs' "right to relief depends upon the construction of the ... laws of the United States...." Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199, 41 S. Ct. 243, 245, 65 L. Ed. 577 (1921). For, as our Court of Appeals declared in Lindy v. Lynn, 501 F.2d 1367, 1369 (1974), "(an) action arises under the laws of the United States if ... it requires the construction of a federal statute...." But of course the Court of Appeals did not mean to suggest that every case which "requires the construction of a federal statute" is a federal question case. Thus, in Moore v. Chesapeake & Ohio Ry., 291 U.S. 205, 54 S. Ct. 402, 78 L. Ed. 755 (1939), the Court held that a law suit for injuries suffered by the plaintiff while engaged in intrastate commerce, presenting claims pursuant to the Kentucky Employers' Liability Act, was not a federal question case, notwithstanding that the plaintiff alleged that defendant's train did not satisfy the requirements of the Federal Safety Appliance Act-an allegation of potentially decisive legal consequence for the reason that the Kentucky Employers' Liability Act precluded the defenses of contributory negligence and assumption of risk " "where the violation by such common carrier of any statute, state or federal, enacted for the safety of employees, contributed to the injury or death of such employee.' " 291 U.S. at 212-13, 54 S. Ct. at 404-05. The Court pointed out that in a case of that sort brought in a state court, questions "relating to the scope or construction of the Federal Safety Appliance Acts are, of course, federal questions which may be appropriately reviewed in this court. But it does not follow that a suit brought under the state statute which defines liability to employees who are injured while engaged in intrastate commerce, and brings within the purview of the statute a breach of the duty imposed by the federal statute, should be regarded as a suit arising under the laws of the United States and cognizable in the federal court in the absence of diversity of citizenship." 291 U.S. at 214-15, 54 S. Ct. at 405-06 (citations omitted).
Perhaps the explanation of Moore is that it was perceived by the Court as kin to the myriad cases holding that a plaintiff cannot frame a state-law claim as an "arising under" case by anticipating a defense based on federal law. See H. Hart & H. Wechsler, The Federal Courts and the Federal System, 883-90 (2d ed. 1973).
If Moore is thus narrowly read, the present case might be classifiable as one in which plaintiffs' claim "requires the construction of a federal statute." However, while I acknowledge that such a classification would be defensible under the relevant case law, I would add that I cannot identify any compelling reasons of federal judicial policy for embracing a case of this kind as a federal question case. The essential Pennsylvania elements of plaintiffs' suit for rescission would be more appropriately dealt with by a Court of Common Pleas than by this court; and, with respect to the lesser-included issue of federal law, Pennsylvania's courts are fully competent to interpret the Magnuson-Moss Warranty Act and the relevant F.T.C. regulations, subject to review by the United States Supreme Court. Nonetheless, I will assume arguendo that the complaint in this case does state a proper "arising under" claim. I make this assumption because it permits me to address what I regard as a far simpler question-the viability of plaintiffs' complaint. To that question I now turn.
In ruling on a motion to dismiss, a court must, of course, assume the truth of the matter alleged in the complaint. Making that assumption in this case, I am nevertheless persuaded that plaintiffs' complaint must be dismissed for failure to state a claim upon which the relief requested may be granted.
As to defendants INA and Titcher, this seems particularly clear, since there is no allegation that these parties made any representation, fraudulent or otherwise, to plaintiffs which was an inducement to enter the contracts at issue. Plaintiffs never allege, nor does it appear likely that they could allege, that INA or Titcher made any representations concerning the compliance of the program with the FTC regulations. Accordingly, plaintiffs' claims against INA and Titcher, both as an individual and as a putative class representative, will be dismissed with prejudice.
With respect to defendants HWC and the Local Council, the situation is somewhat different. In my view, even though there may be some federal question concerning the relationship between the FTC regulations and the HWC home warranty contract, no ground for the rescission relief requested by plaintiffs has been asserted in the present complaint.
Plaintiffs' complaint alleges that defendants represented that the home warranty program "would place such builders (as plaintiffs) in full compliance with the provisions of the Magnuson-Moss Warranty Act ..." and that the "program was being operated in accordance with the requirements of the Act and the regulations of the FTC issued pursuant thereto." Complaint at P 11. As noted earlier, to enforce a claim for rescission under Pennsylvania law, plaintiffs would have to establish that such representations were false. See Adelman, supra. Plaintiffs, of course, allege that defendants' representations were false in that the HWC program called for seller-binding arbitration whereas the FTC regulations called for non-binding arbitration. See Complaint at P's 14-18. For defendants' representations to be considered "false," it would clearly be necessary for plaintiffs to show that they face potential liability for the noncompliance of their warranty with the requirements of the Magnuson-Moss Act or the FTC regulations as a result of the asserted variance. Examination of the Magnuson-Moss Act demonstrates the defects in plaintiffs' complaint.
The Magnuson-Moss Act is essentially a "remedial statute designed to protect consumers from deceptive warranty practices." Skelton v. General Motors Corp., 660 F.2d 311, 313 (7th Cir. 1981). See generally Schroeder, Private Actions under the Magnuson-Moss Warranty Act, 66 Cal.L.Rev. 1, 2-3 (1978). To achieve this goal, the Act establishes minimum disclosure requirements for warrantors; minimum requirements for the form, content and coverage of warranties; and mechanisms for private and public enforcement. Section 110(d) (1) of the Act, 15 U.S.C. § 2310(d)(1), provides a private cause of action for consumers of products covered by warranties who have been injured by any breach of warranty obligations or violations of obligations created by the Act. In addition, section 110 of the Act permits the FTC or Attorney General to institute an action for injunctive relief to prevent unfair trade practices or warranty deceptions.
An initial difficulty for plaintiffs is that it is doubtful that the Act applies to warranties of the sort established under the HOW program. The coverage of the Act is plainly limited in that the Act's requirements only extend to warranties for "consumer products." 15 U.S.C. §§ 2301(1); 2302(a). The FTC regulations defining the scope of this protection make clear that the Act is restricted to "tangible personal property which is normally used for personal family or, household purposes," 16 C.F.R. § 700.1(a), and that, therefore, warranties covering real property such as a home do not fall within the scope of the Act:
(e) The coverage of building materials which are not separate items of equipment is based on the nature of the purchase transaction. An analysis of the transaction will determine whether the goods are real or personal property. The numerous products which go into the construction of a consumer dwelling are all consumer products when sold "over the counter," as by hardware and building supply retailers. This is also true where a consumer contracts for the purchase of such materials in connection with the improvement, repair, or modification of a home (for example, paneling, dropped ceilings, siding, roofing, storm windows, remodeling). However, where such products are at the time of sale integrated into the structure of a dwelling they are not consumer products as they cannot be practically distinguished from realty. Thus, for example, the beams, wallboard, wiring, plumbing, windows, roofing, and other structural components of a dwelling are not consumer products when they are sold as part of real estate covered by a written warranty.
(f) In the case where a consumer contracts with a builder to construct a home, a substantial addition to a home, or other realty (such as a garage or an in-ground swimming pool) the building materials to be used are not consumer products. Although the materials are separately identifiable at the time the contract is made, it is the intention of the parties to contract for the construction of realty which will integrate the component materials. Of course, as noted above, any separate items of equipment to be attached to such realty are consumer products under the Act.