Attorney Fee Recoveries in Federal Consumer Product Warranty Cases

Chapter 50 of the federal commerce and trade laws, which starts at 15 U.S.C. 2301, sets certain standards that must be followed by suppliers, warrantors and service providers with respect to warranties, implied warranties and service contracts. Section 2310 (d) (2) of the Chapter provides that a prevailing consumer under in an action brought under Section 2310 (d) (1) may be awarded reasonable attorney fees as a part of their recovery. First I will discuss the kinds of consumer actions that are covered by this provision, and then I will discuss the parameters of the court’s discretion to grant or not grant attorney fees to the prevailing consumer.

The Attorney Fee Recovery provision applies, with a few carve outs, to any action by a consumer who has been damaged by the failure of a supplier, warrantor, or service provider to comply with an obligation under the Chapter or under a warranty, implied warranty or service contract.

The carve outs relate to a warrantor’s informal dispute settlement procedures and the opportunity to cure defects. The first carve out states that warrantors are allowed to establish informal procedures for solving warranty disputes that the consumer must follow before taking the warrantor to court. These procedures must meet standards established either directly in Chapter 50 or through the Federal Trade Commission. Therefore, where a valid informal settlement procedure is established, it must be followed before the consumer can proceed in court. The second carve out states that, before initiating a legal action, the consumer must allow the entity obligated under a warranty, implied warranty, or service contract a reasonable opportunity to cure any defect in their performance. (In either case, a court may allow a class action to be filed, and the procedure to determine the representative capacities of named plaintiffs to go forward, as exceptions to the carve outs.)

As to the court’s discretion to grant or not grant attorney fees, a sample of the case law shows the following: (1) there must be proof that the actual fees were expended (or that the specific work from which a reasonable fee was calculated was done); (2) the first mention of a demand for fees cannot come in a post trial motion (it should be inserted in the pleadings); (3) fees will only be paid for prosecuting causes of action brought under Chapter 50 that result in a judgment for the consumer (no fee awards for work done on dismissed causes of action or causes of action not authorized by Section 2310 (d) (1)); (4) settlements should explicitly state how attorney fees are to be handled; (5) only a prevailing consumer (not a prevailing defendant) can be awarded fees under section 2310 (d) (2); and (6) courts may limit attorney fees based on any determination that they are excessive (including the amount of the fees in proportion to the amount of damages) or may allow fee accelerators for high value/high risk cases.


The information contained in this blog is not legal advice and should not be relied on as such. For legal advice or for answers to specific questions, please contact the blog's author.