May 31, 2017
Volume 17 Issue 52
Castrol Warranty Draws Class Action
BP Lubricants USA and Pennsylvania used-car dealer CarSense face a class action alleging that their requirement to use Castrol brand products for engine warranty coverage constitutes an illegal tie-in that violates the Magnuson-Moss Warranty Act.
The complaint was filed on May 5 in the Eastern District of Pennsylvania’s U.S. District Court.
The plaintiffs, Alison and Timothy Leary, seek damages, injunctive relief and attorney’s fees and costs exceeding $5 million. All consumers who bought CarSense’s “Lifetime Engine Guarantee” or the “Castrol Engine Guarantee” in the U.S. since May 2011 are included in the “class” represented in the case.
When asked about this class action complaint earlier this month, BP Lubricant’s Communication Manager Paul Giblett said, “While we have heard reports of this case, BP has not yet been served with a complaint relating to this claim.” CarSense and the plaintiff’s lawyers did not respond to requests for comment.
Passed by the U.S. Congress in 1975, the Magnuson-Moss Warranty Act was designed to promote competition and ensure consumers receive complete information about warranty terms. The act prohibits “tying” arrangements that require consumers to buy a particular brand item or service to use with a product to be eligible for warranty, unless the item or service is provided free of charge.
After purchasing a CarSense vehicle – which included CarSense’s lifetime engine warranty and BP’s Castrol engine warranty in the purchase price – in June 2016, Timothy Leary took the vehicle to a quick lube for its first oil change. To avoid voiding the warranties, Leary paid an additional $40 for use of a Castrol synthetic motor oil.
CarSense’s “lifetime engine guarantee” covers oil-related mechanical failure or abnormal wear of a vehicle’s engine for 10 years or 300,000 miles, as long as the oil is changed every four months or 4,000 miles. Warranty coverage requires the use of BP Castrol’s “premium” synthetic engine oil.
Though the complaint cites the Castrol engine guarantee as a point of contention, CarSense does not reference this warranty on its website. Castrol, however, describes it as a “wear protection warranty covering parts that Castrol oil lubricates in your engine” on the warranty’s official web page.
Until Dec. 15, 2011, when the Castrol brand became associated with the warranty, CarSense’s program required Quaker State for engine oil changes. Since then, customers who purchased the warranty from CarSense have had the option to either continue using Quaker State oil for engine oil changes performed at locations other than CarSense dealerships, or they can switch to the Castrol brand. Switching back and forth between the two oil brands is prohibited and will void the warranty.
The complaint document noted that BP, which acquired the Castrol brand in 2002, sent comments about tie-in sales in 2011 when the U.S. Federal Trade Commission issued a public request for comment on the Magnuson-Moss Warranty Act’s tie-in sales provisions. “It is well established that the practice of tying is anti-competitive by preventing competing sellers from selling the ‘tied’ product to purchasers and is also harmful to the consumer by foreclosing other sources of supply for such products,” T. Kevin Sheehy, BP’s managing attorney at the time, said in a written statement. “The intent of the Act is not served if consumers are not provided with assurance that they are not taking a gamble with warranty difficulties if they choose a lubricant other than the lubricant brands designed by manufacturers.”
Some past situations involving claims concerning the Magnuson-Moss Warranty Act have involved carmakers requiring oil changes be conducted at their dealerships or that only a certain brand of motor oil be used, as a condition of warranty coverage.
For example, in March 2015 the FTC issued an administrative complaint against BMW of North America LLC. The FTC alleged that BMW’s Mini Division violated the tie-in provision of the Magnuson-Moss Warranty Act by stating in Mini owner manuals, beginning with 2012 models, that “only Mini dealers are to perform oil changes,” lest the four-year, 50,000-mile limited warranty be rejected. BMW settled the charge in 2015, saying it would discontinue the practice.
In 2004, the Automotive Oil Change Association filed a complaint with the FTC accusing Volkswagen of prescribing its own brand of motor oil as a requirement for warranty coverage on some vehicles, in violation of rules against tie-in sales provisions. Over the years, the fast-lube trade association has filed similar complaints against other automakers, including DaimlerChrysler, General Motors, Honda, Nissan, Mazda, Kia Motors and BMW.