From Legislation to Litigation: Navigating Right-to-Repair Laws for Manufacturers

News

New Jersey Law Journal

December 12, 2023

The right-to-repair movement is growing in the United States, making so called “right to repair” laws a point of concern for manufacturers. These laws, which are designed to make it easier for people to fix things themselves or do so through a repair provider of their choice, mandate that manufacturers share their parts, tools, and service information. As an increasing number of states enact their own right-to-repair legislation and the federal government scrutinizes repair restrictions for violations of anti-trust laws, manufacturers across all industries now find themselves navigating an intricate network of legal and regulatory challenges.

Manufacturers Concerns With Right-to-Repair Compliance

Manufacturers likely have numerous concerns regarding right-to-repair laws as they discover the potential impact compliance with these laws will have on their business practices and operations. Compliance with these laws entails administrative costs, including the development and maintenance of systems for providing repair information, training and certifying repair providers, and ensuring adherence to state and federal regulations. Given the varying nature of right-to-repair laws across the states, navigating different legal jurisdictions adds to the administrative burden, which is particularly challenging for manufacturers with a national (or global) presence.

Aside from pure administrative challenges, manufacturers face other significant concerns as well. First, there’s the fear of compromising intellectual property, trade secrets, or proprietary technology when providing repair access. Sharing repair information could lead to potential unauthorized access by competitors or a potential data breach. Second, since product safety and liability are crucial to manufacturers, there may be concerns about injuries arising from incorrect independent repairs. Such injuries could lead to lawsuits and further complicate warranty enforcement. Third, maintaining a positive brand image is paramount, and subpar work by independent repairers poses a threat to manufacturers, including variations in service quality and potential impacts on product performance and authorized service providers’ profitability.

National and Federal Landscape of Right-to-Repair Initiatives

Thirty-three states, including New Jersey, considered right-to-repair legislation during the 2023 legislative session, while five states—Colorado, California, New York, Massachusetts and Minnesota—have already enacted such laws. See National Conference of State Legislatures, “Right to Repair 2023 Legislation,” (Nov. 1, 2023).

New Jersey’s proposed right-to-repair bill focuses on establishing fair repair practices for digital electronic equipment, covering mobile phones, tablets, and other common consumer electronic devices. Fair Repair Act, No. 1538, 220th Legislature (2022). The bill mandates original equipment manufacturers (OEMs) supply independent repair providers or equipment owners with the same diagnostic, service, or repair documentation as authorized repair providers, without charge and within the same time frame as the OEM makes these documents available to its authorized repair providers.

At the national level, the U.S. Senate has introduced the Fair Repair Act, while the U.S. House Agriculture Committee introduced the Agricultural Right to Repair Act. See, Fair Repair Act, S. 3830, 117th Cong. (2022); see also, Agricultural Right to Repair Act, H.R. ___, 118th Cong. (2023). President Joseph Biden also signed an executive order urging the FTC to limit OEMs ability to prohibit self-repairs. See, ”The White House, Fact Sheet: Executive Order on Promoting Competition in the American Economy,” (July 9, 2021).

The Federal Trade Commission (FTC) has heeded this call as well and put out a statement that it would “prioritize investigations into unlawful repair restrictions” and “devote more enforcement resources to combat these practices.” See, Federal Trade Commission, “Policy Statement of the Federal Trade Commission On Repair Restrictions Imposed By Manufacturers And Sellers,” (accessed Nov. 11, 2023).

Companies Are Already Confronting Right-to-Repair Litigation

As right-to-repair laws gain momentum across the United States, companies are already grappling with this issue—facing either government scrutiny or consumer lawsuits.

The year after Biden’s executive order, the FTC initiated three separate actions against three manufacturers under the Magnuson-Moss Warranty Act and the Federal Trade Commission Act (there had only been one lawsuit on aftermarket restrictions in the prior 10 years). The FTC alleged efforts by the manufacturers to limit independent product repairs by incorporating warranty provisions that suggested any warranties would be voided if customers used third-party parts or independent repairers. See, Lesley Fair, “FTC Announces Three Right-to-Repair Cases: Do Your Warranties Comply with the Law?,” Fed. Trade Comm’n: Business Blog (July 7, 2022). The litigation resulted in the manufacturers entering into consent orders that required they make changes to their warranties, engage in extensive self-monitoring, and provide the FTC with ongoing compliance reports. See, “FTC Approves Final Orders in Right-to-Repair Cases Against Harley-Davidson, MWE Investments, and Weber,” Federal Trade Commission (Oct. 27, 2022).

The FTC’s increased enforcement of right-to-repair issues has led to a rise in class action cases involving these claims under the Magnuson-Moss Warranty Act and federal antitrust laws. Notably, John Deere faced a class action in Illinois, before reaching a memorandum of understanding (MOU) with the American Farm Bureau Federation. See, In re Deere & Co. Repair Servs. Antitrust Litig., 607 F. Supp. 3d 1350 (U.S. Jud. Pan. Mult. Lit. 2022). Beyond John Deere, companies like Tesla and Apple are also entangled in right-to-repair lawsuits in California federal court, with allegations that their warranties and repair policies aim to impede the use of independent shops and non-branded parts. See Lambrix v. Tesla, Case 3:23-cv-01145 (N.D. Cal. March 13, 2023); see also, Granato v. Apple, Case 5:22-cv-02316 (N.D. Cal. July 19, 2023). Harley-Davidson has also been the subject of multiple class action lawsuits in recent years for alleged violations of state competition law and federal antitrust provisions. See, Koller v. Harley-Davidson Motor Company, 4:22-cv-04534 (N.D. Cal. Aug. 5, 2022); see also, Assise et al. v. Harley-Davidson, 2:22-CV-00913 (E.D. Wis. Aug. 9, 2022).

Proactive Compliance Strategies for Companies

The government and private plaintiffs appear interested in pursuing claims against manufacturers with policies and practices influencing who can repair their products or how those repairs are conducted. Therefore, manufacturers with repair and service policies should consider the following to ensure compliance with future right-to-repair laws, minimize the risk of litigation or government investigations, and maintain positive relationships with their customers.

1. Review Warranty Terms: Review your product’s current warranty terms and conditions to assess if modifications are needed. The FTC’s renewed enforcement emphasizes that manufacturers cannot state that warranties will be void if consumers use third-party services or parts, since such a provision is unlawful under the Magnuson-Moss Warranty and FTC Acts. Manufacturers should conduct an internal compliance check now to modify warranties before potential FTC investigations or class action announcements arise.

2. Examine Repair Restrictions: Assess whether any restrictions on repairs exist, and if so, evaluate their justification. The FTC’s 2021 report to Congress highlights that manufacturer repair restrictions may raise antitrust claims related to monopolization. See Fed. Trade Comm’n, “Nixing the Fix: A Report to Congress on Repair Restrictions,” at 14-15 (Accessed Nov. 11, 2023).

Certain warranty restrictions, such as those for privacy/data security or manufacturing safety reasons, may be justified. While the FTC has not filed repair-related actions solely based on antitrust law, private plaintiffs have filed suits for overcharging and refusal-to-deal theories.

3. Adopt a Collaborative Approach: Embrace collaboration with consumers instead of a defensive stance. John Deere’s MOU with the American Farm Bureau offers a good example of addressing customer concerns while addressing the manufacturer’s safety and proprietary considerations. Indeed, other companies have recognized collaboration may be the better course forward. Samsung and Google have announced programs to enhance consumer access to repair options, and Apple dropped its opposition to California’s right-to-repair legislation. Manufacturers should consider providing consumers and repair providers with access to diagnostic tools, manuals, and software updates for informed choices and safe repairs.

4. Cooperate With Repair Networks To Ensure Quality Control: Work with authorized and independent repair providers to expand repair service accessibility while maintaining some level of control. Manufacturers should consider implementing rigorous quality control processes within the repair network to ensure correct and safe repairs. This could be done through training and certification programs for technicians. It is also recommended that repair networks keep detailed records of product repairs and service history to evidence compliance with right-to-repair laws and resolve future disputes.

5. Monitor Legal Changes: Develop compliance teams within the company to stay updated on legal requirements at both the state and federal levels. Rapid changes in regulations necessitate continuous monitoring for proactive compliance. The compliance team can also develop risk mitigation strategies that address consequences for non-compliance through legal and financial safeguards for litigation, fines, and reputation management.

The momentum of the right-to-repair movement shows no sign of waning. Proactively adhering to right-to-repair laws not only shields companies from potential litigation and government investigations, but also aligns them with the shifting landscape of consumer expectations.

Evan H. Holland is a member of Gibbons’ products liability group and works on a range of products liability and toxic tort matters. He has experience in all aspects of the pretrial litigation process, including responding to discovery, drafting dispositive motions, preparing mediation statements, and taking and defending depositions. Contact him at eholland@gibbonslaw.com.

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Reprinted with permission from the December 12, 2023 issue of the New Jersey Law Journal. © 2023 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved. For information, contact 877-257-3382 or reprints@alm.com or visit www.almreprints.com.