Ninth Circuit Affirms Dismissal Of Lawsuit Challenging OEM “Destination Charges” As Deceptive

The Ninth Circuit recently affirmed the dismissal of a putative consumer class action challenging a manufacturer’s “destination charge” as an undisclosed and deceptive “vessel for profit” in violation of California and New Jersey law.  Since 1958, the Monroney Act has required manufacturers to affix a label to each new vehicle prior to sale and delivery to dealers disclosing certain information, including the manufacturer’s suggested retail price for a new vehicle and any charges for the transportation of the vehicle to the dealer.  The purpose of these so-called “Monroney labels” was to prevent dealers from “price packing,” i.e. boosting the manufacturer’s suggested retail price for a car with add-ons that deceived consumers as to the actual price of the vehicle.

In Romoff v. General Motors, LLC, consumer plaintiffs claimed that the “destination charge” reflected on a manufacturer’s Monroney labels misled reasonable consumers into believing the charge reflected the actual cost of shipping vehicles to their destination, when according to the plaintiffs, the manufacturer actually profited from the imposition of this charge. In December 2021, a California federal district court granted the manufacturer’s motion to dismiss, finding that “[t]he term ‘Destination Charge’ does not reasonably imply an absence of profit.”

The Ninth Circuit affirmed the district court’s decision, finding that “the destination fee is charged to the dealers and paid by them to GM, regardless of Plaintiffs’ speculative reasoning concerning what is responsible for the makeup of such fees.” Moreover, the appeals court noted that there was “no allegation that GM charged the dealers a lesser amount than is represented to consumers.” Because the “Destination Charge” was in fact charged to dealers, there could not be any basis to find that the manufacturer had somehow misled consumers.