The Franchise Memorandum

A federal court in Wisconsin recently dismissed a multi-district class action suit in which owners of Harley-Davidson motorcycles asserted that Harley-Davidson violated the Magnuson-Moss Warranty Act (MMWA), as well as state antitrust and consumer protection laws. In re Harley-Davidson Aftermarket Parts Marketing, Sales Practices, and Antitrust Litigation, 2024 WL 2846349 (E.D. Wis. June 5, 2024). The plaintiffs alleged that Harley-Davidson used the potential voiding of its factory warranty to force owners of motorcycles still under warranty to purchase Harley-Davidson branded parts when less expensive aftermarket options were available. Harley-Davidson moved to dismiss the case for failure to state a claim.

The court found that the plaintiffs failed to state a claim that the limited warranty violated the MMWA. The plaintiffs alleged that the warranty violated the MMWA’s “tying provision” by requiring owners to use only authorized Harley-Davidson dealers and Harley-Davidson parts and accessories to maintain the validity of the limited warranty. The court disagreed, finding that “because Harley-Davidson’s limited warranty does not state that using non-Harley Davidson parts will affect the warranty, it has not improperly tied the warranty to use of Harley-Davidson parts.” Next, the plaintiffs alleged that Harley-Davidson failed to comply with MMWA’s pre-sale warranty obligations adopted by the FTC, which require “that the terms of any written warranty on a consumer product be made available to the consumer (or prospective consumer) prior to the sale of the product to him.” The court found that the plaintiffs failed to state a claim for a violation of the MMWA because they failed to allege that Harley-Davidson did not include a copy of the written warranty with each motorcycle. The court likewise dismissed the antitrust tying claims because the potential voiding of the warranty did not sufficiently mandate the purchase of the allegedly tied product, i.e., replacement parts. Finally, the plaintiffs’ “failure to prove a substantive tying violation precludes them from claiming that defendant’s actions in that respect also constituted an attempt to monopolize.” Accordingly, the entire case was dismissed, although the plaintiffs were given leave to amend if they chose to do so.