§ 1959 of the Lemon Law prohibits the purchaser of an automobile from filing a Lemon Law claim where the manufacturer has established (1) that its informal settlement procedure complies with certain FTC rules; and (2) that plaintiffs have not first resorted to such procedure.
According to the defendant, because its informal settlement procedure complies with 16 C.F.R. Pt. 703, and since plaintiffs did not first resort to such procedure under § 1959 of the statute prior to filing this lawsuit, the Court should grant the motion for summary judgment as to plaintiffs' Lemon Law claim. Plaintiffs counter that the defendant's informal settlement procedure does not comply with 16 C.F.R. Pt. 703, and therefore, according to plaintiffs, they were under no statutory obligation to first resort to it before bringing the Lemon Law claim. Plaintiffs further contend that, even if the informal settlement program complies with the applicable regulations, they have satisfied the "first resort" requirement under the statute.
The defendant's informal procedure program consists of arbitration under the auspices of the Better Business Bureau. The defendant has submitted a sworn affidavit from a senior attorney with the Better Business Bureau, which states that the arbitration program involved "has been established to comply with the provisions of 16 C.F.R.Pt. 703," and further explains that for each of the past eleven years an outside auditor has confirmed that the arbitration program complies with the FTC regulations. Since the defendant has pointed to evidence that it has established a dispute resolution program and that the arbitration program thereunder complies with 16 C.F.R.Pt. 703, the defendant as the moving party in this matter has met its burden of informing the Court of the basis for its motion and identifying those portions of the record which demonstrate the absence of the genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. at 325.
Once the movant has satisfied its initial burden, Rule 56 requires that the nonmovant "must go beyond the pleadings, and by its own affidavits, or by the depositions, answers to interrogatories, and admissions in file, designate specific facts showing there is a genuine issue for trial." Id. at 324 This the plaintiffs have failed to do. Rather, in response to the motion for summary judgment, the plaintiffs proffered a letter from an FTC investigator, which was previously submitted to the district court in another case, in support of their contention that the FTC has already found the arbitration program at issue here fails to comply with 16 C.F.R.Pt. 703. This letter from the FTC investigator does not constitute admissible evidence for Rule 56 purposes. See Fed. R. Civ. P. 56(c) (requiring non-movant to submit affidavits, depositions, answers to interrogatories, or admissions on file to counter movant's showing).
Moreover, even if the Court were to consider the letter from the FTC investigator, the Court disagrees with plaintiffs' contention that the letter supports their claim. In the first instance, and as the letter explains, "this opinion is that of [FTC] staff and, as such, is neither attributable to nor binding on the [FTC] itself or any individual Commissioner." Doc. 4, Exhibit D at 1. Therefore, on its face, the letter does not support the position that the FTC has opined on the defendant's BBB Auto Line Program.
More importantly, even assuming that the letter could be considered by the Court for Rule 56 purposes and that it is probative of the FTC's views on this matter, the content of the letter is wholly inconclusive. See e.g., Jenkins v. General Motors Corp., 1995 U.S. Dist. LEXIS 9959, 1995 WL 422680 at *3 (E.D. Pa.) (finding as "inconclusive" a similar letter submitted by the same FTC investigator in another Lemon Law case). In the penultimate paragraph of the letter, it states that, "under these circumstances, the Commission would not make a determination as to the BBB Auto Line Program's compliance with the requirements of Rule 703 to Nissan or American Honda Vehicles" Doc. 4, Exhibit D at 2.
Therefore, the Court finds that plaintiffs as nonmovant have failed to point to any evidence in the record that raises a genuine issue of material fact concerning defendant's compliance with 16 C.F.R. Pt. 703.
The second issue is whether the plaintiffs first resorted to the arbitration process before filing this action. The "requirement that [plaintiffs] first resort to the alternative [arbitration] procedure [of the automobile manufacturer] is one that must be met in good faith." Rudder v. American Honda Motor Company, 1995 U.S. Dist. LEXIS 4747, 1995 WL 216955 at *7 (E.D. Pa.). See also, Jenkins, 1995 U.S. Dist. LEXIS 9959, 1995 WL 422680 at *2 (explaining that under § 1959 of the Lemon Law plaintiff must "first resort" in good faith to alternate dispute resolution procedures).
Pennsylvania courts have defined the duty of good faith in other contexts as "'honesty in fact in the conduct or transaction concerned,'" Somers v. Somers, 418 Pa. Super. 131, 135, 613 A.2d 1211, 1213 (1992) (citing 13 Pa. C.S. § 1201); see also, Kaplan, 448 Pa. Super. 306, 317, 671 A.2d 716, 721 (1996), and as doing "those things that according to reason and justice [a party to a contract] should do in order to carry out the purpose for which the contract was made and to refrain from doing anything that would destroy or injure the other party's right to receive the fruits of the contract." Somers, 418 Pa. Super. at 135, 613 A.2d at 1213 (quoting Frickert v. Deiter Bros. Fuel Co., Inc., 464 Pa. 596, 603, 347 A.2d 701, 705 (1975). An example of lack of good faith is "failure to cooperate in the other party's performance [of the contract]." Kaplan, 448 Pa. Super. at 317, 671 A.2d at 721; See also, Somers, 418 Pa. Super. at 135, 613 A.2d at 1213.