John Deere ‘Right to Repair’ Class Actions Get Centralized Forum | Carlton Fields
In recent years, a vigorous debate over consumers’ “right to repair” products they have purchased has drawn the attention of lawmakers and regulators, as well as the attention of the plaintiffs’ class action bar. Until recently, the class action segment of the controversy spanned every court in the country. Last month, however, the largest set of Right to Repair cases was consolidated in the Northern District of Illinois, which will be a key hub of activity in the space for the foreseeable future.
The right to repair movement is somewhat misnamed because consumers have a general “right” to do what they want with their own property, but often lack the practical means aptitude to repair their property due to contractual restrictions (such as automatic voiding of a warranty) or limitations on access to the tools, parts or know-how needed to make the repairs. The original equipment manufacturer is often the exclusive source of replacement parts, manuals, and other physical and electronic tools that make a repair possible. This control may have spillover effects on ancillary markets, since a refusal to make these materials available, or limits on distribution, may allow the manufacturer to choose its own service market competitors, if it participates in such markets. Similarly, a manufacturer’s policy of voiding the product warranty if the product is opened dampens incentives to enter the service market, or for a buyer to employ an independent service company.
Two manufacturers in particular have been the main targets of the movement’s ire: Apple and John Deere. Each company has broad and active constituencies, and each has historically limited who can fix their products or access the materials needed to do the job well. Given the popularity and ubiquity of their products, the debate has not escaped the attention of Congress and regulators. President Biden released a Executive Decree calling on a newly reconfigured and increasingly militant Federal Trade Commission to develop regulations prohibiting manufacturers’ policies prohibiting the repair of equipment and appliances by individuals and independent repair shops. The Senate and House of Representatives each introduced right-to-repair invoices that would require OEMs to make documentation, parts, software, or tools available to any owner or independent repair center on fair and reasonable terms. Similar bills have been introduced in a number of state legislatures.
This increased legislative attention has not slowed class action lawsuits against manufacturers challenging their repair restrictions and seeking damages. A series of such cases have been filed against John Deere, the market leader in tractor sales in the United States. The gist of these cases is that as tractors have become more sophisticated, consumers’ historical ability to self-repair (or use a local repair shop) has been significantly reduced because diagnostic software and the necessary custom parts or tools are not available to owners or independent service shops. As a result, Deere’s own network of dealers and technicians would dominate the ancillary market for servicing Deere tractors, resulting in higher prices, less choice and long repair times.
The plaintiffs’ primary legal theory is that Deere’s practices violate both Sections 1 and 2 of the Sherman Antitrust Act. Section 1 targets collusive practices that unreasonably restrict trade; in these cases, the relevant agreements are those between Deere and its dealer network which allegedly restrict the distribution of software and diagnostic tools. The main event, however, is under Section 2, which targets the monopolistic behaviors of individual firms. The theory is that Deere leveraged its (legally acquired) market power in tractor product markets to gain an illegal monopoly in the tractor service market.
The leading U.S. Supreme Court case, and its potential application to modern right to remedy cases, has been the subject of a separate study. article by the author of this message. But in sum, the 1992 court decision in Eastman Kodak Co. v. Image Technical Services Inc. ruled that Kodak’s refusal to sell original copier parts to independent service companies amounted to an illegal link between Kodak parts—which Kodak exclusively controlled—and copier service, the allegedly monopolized market. Kodak is an unusual case because defendant had no monopoly power in the copier market (which Xerox dominated), had such power over its own custom parts (but so do countless manufacturers with otherwise de minimis market share) but still violated the Supreme Court’s test for an illegal tie per se.
The Supreme Court today, with the exception of Justice Thomas (who joined Justice Scalia in strong dissent in Kodak), is entirely different from the one who decided Kodak, and it is unclear how the court will deal with similar issues presented in right-to-repair cases if they come to court. In the future, it is reasonably likely that Congress and the FTC will act on legislation and regulations that will govern a manufacturer’s obligations to provide reasonable access to materials necessary for independent repair. Indeed, some companies, including Deere and Apple, have suggested taking steps to increase this access ahead of ongoing legal changes.
On the class action front, 13 of the 14 class action lawsuits pending against Deere have been consolidated by the US Multidistrict Litigation Panel in the Northern District of Illinois for pre-trial activity. Assuming some or all of the cases go through at least class certification and summary judgment, this group of cases is likely to have a significant impact on the case law regarding the right to redress for pre-adoption conduct. (likely) coming of a new regulatory regime.