BSCR Firm News/Blogs Feed

Right to Repair Laws: An Overview and Legislative Update

09 Apr 2024

ABSTRACT: As manufacturers seek to limit the ability of consumers and third parties to repair their products, state and federal legislators introduce "right to repair" legislation that would loosen those restrictions.

Repairing complicated digital equipment has become increasingly difficult in recent years. In most instances, a consumer in need of a repair of any digital equipment has few, if any, choices for where and how the equipment is repaired. The original equipment manufacturer (OEM) will typically only offer the tools, parts, and information necessary to make those repairs through the OEM itself or a licensed dealer. As a result, consumers and independent repair providers lack the tools and expertise necessary to make these repairs. Further, many products’ warranties are voided if a piece of equipment is repaired by someone other than the OEM or an officially licensed dealer.

There is now a growing effort to enact “right to repair” laws to give consumers more flexibility to repair their own equipment. Generally, these laws grant consumers and independent repair companies access to the tools, parts, documentation, and software required to diagnose, maintain, and repair certain types of equipment. These laws typically require the OEM to provide manuals with specifications, schematics, and software updates to consumers at no cost, to allow the devices to be repaired without voiding the warranty, and to give independent repair companies access to the same tools and repair parts as the OEM on “fair and reasonable terms.” These laws are primarily introduced in the digital equipment industry (typically defined as anything requiring a computer chip), motor vehicles, and the agricultural and construction equipment industry. There have also been attempts to introduce similar legislation covering medical equipment, wheelchairs, educational devices, and motorcycles.

Proponents of these bills argue these laws provide consumers with more freedom to repair their own equipment or choose their own repair shop. They further argue these laws will drive repair costs down by increasing competition and will reduce electronic waste. The opponents of these laws, including the OEMs themselves, argue providing detailed specifications and schematics to consumers and third-party repair companies would reveal valuable trade secrets and proprietary information. They argue this would disincentivize innovation, research, and development of new products. Further, allowing the consumer full repair and maintenance access could lead to modifications that would make the product unsafe or non-compliant with applicable safety or emissions regulations, potentially leading to more injuries or liability to the OEMs.

To date, six states have passed right to repair laws. Massachusetts was the first, passing a motor vehicle right to repair law in 2012 and another in 2020, which required vehicle manufacturers to provide a standardized open data platform to vehicle owners and independent repair facilities. Since 2022, Colorado, New York, Minnesota, Maine, and California have passed various right to repair laws. Currently, approximately twenty-seven states have some form of a right to repair law introduced or pending.

Federal efforts to pass right to repair laws have so far been unsuccessful, although one bill is still active. Rep. Joseph Morelle (D-NY) introduced the “Fair Repair Act,” which would apply to digital electronic equipment, in June 2021. It was referred to the House Energy and Commerce Committee in June 2021 and died shortly thereafter. Sen. Ben Ray Lujan (D-NM) introduced the Fair Repair Act to the Senate in March 2022. As with the House bill, it was referred to committee, where it did not advance. Most recently, Rep. Neal Dunn (R-FL) introduced the “Right to Equitable and Professional Auto Industry Repair Act” or “REPAIR ACT”, seeking to require motor vehicle manufacturers to provide the vehicle’s owner with direct, real-time data related to diagnostics, repair, service, wear, and calibration of parts and systems of the vehicle. It has 50 bipartisan co-sponsors. It was referred to the House Energy and Commerce Committee, where it was most recently forwarded to the full committee for a voice vote in November 2023. The result of that vote has not been reported.

Missouri, Kansas, or Illinois have yet to pass any right to repair legislation. Certain Missouri legislators have attempted to pass these bills on multiple occasions. House Bill No. 975, introduced by Rep. Barry Hovis (R-Cape Girardeau County), would have guaranteed the right to repair any “construction machinery, any mobile heavy equipment or heavy machinery designed for construction or earthwork tasks[.]” The bill was introduced in January 2021 and died in committee in May 2021. Rep. Hovis re-introduced the same bill two more times, HB 2402 and HB 698, in January 2022 and January 2023, respectively. They suffered the same fate, dying in committee shortly thereafter. The Missouri Chamber of Commerce and Industry, a private organization, officially spoke out against HB 2402, arguing it would “threaten [agricultural equipment manufacturers and dealers] security, intellectual property and warranty agreements—not to mention opening them up to undue liability.” Missouri Senator Tracy McCreery (D-St. Louis County) introduced Senate Bill 554 in January 2023. Senate Bill 554 was significantly broader than the house bills, covering all electronic equipment. This also died in committee in May 2023.

Missouri currently has five proposed right to repair bills: 1) HB 1618, introduced by Rep. Brian Seitz (R-Taney County), would protect the right to repair any products “that depend on digital electronics embedded in or attached to them” (excluding motor vehicles); 2) HB 2041, introduced by Rep. Emily Weber (D-Jackson County), would guarantee consumers the same rights to diagnostic and repair information as independent repair providers and authorized repair providers for any electronic product; 3) HB 2475, introduced by Rep. Hovis, seeks the same protections as his earlier bills; 4) SB 1472, introduced by Sen. McCreery, seeks the same protections as her prior SB 554; and 5) HB 2800, a motorcycle right to repair bill introduced by Rep. Seitz. All the proposed bills would make any violation an unlawful practice under the Merchandising Practices Act. These bills are currently in committee and have not received a vote.

Illinois also has active right to repair laws pending. Illinois SB 2669, introduced by Sen. Jill Tracy (R-Quincy), seeks to protect the right to repair agricultural equipment. It was introduced in January 2024 and is currently awaiting committee assignment. Similarly, SB 2680, introduced by Sen. Laura Fine (D-Glenview), was introduced in January 2024 and is awaiting committee assignment. It seeks to guarantee the right to repair home electronic products or appliances. On the House side, Rep. Michelle Mussman (D-Schaumburg) introduced three right to repair bills in February 2023. HB 3593 seeks to guarantee the right to repair digital electronic equipment. HB 3601 looks to protect the right to repair educational technology, and HB 3602 seeks to protect the right to repair electronically powered wheelchairs. All three of these bills are currently in committee and have yet to receive a vote. Similar to the Missouri bills, the Illinois bills make any violation an unlawful practice under Illinois’s Consumer Fraud and Deceptive Business Practices Act.

Kansas does not currently have any right to repair laws proposed or pending. The most recent attempt was House Bill No. 2122, introduced as a committee bill by the Committee on Federal and State Affairs. It was introduced in January 2017 and ultimately died in committee in May 2018. There have been no official attempts to introduce any right to repair laws since.

As these laws are still relatively new, the total effect they may have on repair prices, competition, and liability remains to be seen.

Defense Victory in Negligent Auto Repair Claim

08 Apr 2024

Our firm was hired to defend a full-service auto repair shop client regarding a negligent repair claim alleged on a pickup truck, which the plaintiff asserted caused engine failure. Our client contended the repairs were made correctly, and the engine failure was caused by other reasons. After a bench trial, the court issued a ruling in our client’s favor.

Legal Administrative Assistant, Kansas City

05 Apr 2024

Our Kansas City office is seeking a highly motivated and skilled legal administrative assistant. View the job description here.

Litigation is not late in challenging new CFPB Rule capping credit card late fees.

04 Apr 2024

ABSTRACT: The banking industry and financial services business groups did not wait long to file litigation challenging a recent rule enacted by the Consumer Financial Protection Bureau looking to limit the fees credit card issuers can charge for late payments.

We have our eyes on recent litigation arising out of the Northern District of Texas. On March 7, 2024, a lawsuit challenging a new rule issued by the Consumer Financial Protection Bureau (“CFPB”) on March 5th, 2024, was filed by the American Bankers Association and other financial services business groups (collectively the “ABA”). The TILA has a statutory requirement that fees, such as late fees, be reasonable and proportional to the omission or violation to which the fee relates, and the CFPB determined current late fees exceeded the reasonable and proportional statutory limit.

Summary of the New Rule

The CFPB issued a final rule amending Regulation Z of the Truth in Lending Act (“TILA”). The new rule caps fees for large credit card issuers, allowing a charge of no more than $8 when a consumer makes a late payment on their credit card. The prior version of Regulation Z capped late payment fees at $30.00 for first time offenses and $41.00 for each subsequent violation. The Final Rule also removes a provision which automatically adjusted the ceiling for late fees to keep pace with inflation. If the rule becomes effective, it will apply to approximately 95% of all credit cards issued in the United States.

The final rule does allow banks to seek to charge a higher fee if they can demonstrate a higher cost in collecting penalties after late payment occurs, but the credit card companies cannot include the cost of collection efforts in making that demonstration.

Litigation Commenced Immediately

The banking industry and business groups did not wait long to challenge the CFPB's Final Rule. On March 7th, 2024, the Chamber of Commerce of the United States of America, The American Bankers Association, and other business groups filed litigation in the Northern District of Texas challenging the CFPB's Final Rule. The ABA alleges that the CFPB's final rule is not only unlawful, but also that the Rule violates the appropriations clause of the United States Constitution and exceeds the CFPB's statutory authority. The ABA has asked the Texas District Court to vacate the Final Rule.

History of the TILA and Regulation Z

Congress enacted the credit card Accountability Responsibility and Disclosure Act in 2009. The Card Act includes a series of provisions governing credit card terms and conditions, including penalties or for late fees requiring the same to be reasonable and proportional. Congress delegated to the CFPB the duty to establish standards for assessing whether the amount of any penalty fee is reasonable and proportional. In setting those standards, the CFPB is charged with considering, among other things, the deterrent effect of a late fee, the conduct of the cardholder, and the cost card issuers incur because of late payments. The ABA argues the provisions of the Card Act demonstrate Congress's recognition that for penalty fees to be effective, they must be sufficient to deter late payments, account for the conduct of late payments by consumers, and compensate card issuers for the costs incurred from late payments. The ABA contends of the Final Rule does not satisfy the charge of Congress in delegating the authority to the CFPB to enforce the Card Act. The ABA also argues that the new Rule will harm credit card users who pay their bills on time because of an increase likely to occur in the minimum payments, annual fees, or APRs or for credit card issuers to offer fewer rewards to all customers.

Challenges to the CFPB’s New Rule

The ABA argues the CFPB exercised flawed statutory interpretation and rule-making authority in issuing the Final Rule. Specifically, the ABA argues the CFPB adopted a new standard linked solely to the issuers costs and ignored other requirements. Congress charged the CFPB with considering and making new rules. The ABA also argues that CFPB's flawed statutory interpretation is particularly evidenced in the context of cardholders who are repeatedly late in making their payments. The Final Rule does not allow a higher fee for subsequent late payments and thus has no additional deterrent effect on repeat late payers as opposed to persons who are only late on a single instance.

The ABA also argues that the CFPB improperly relied on non-public data in issuing the Final Rule.

The ABA and other business groups also reiterate a challenge to the CFPB's funding structure, which has been challenged in other litigation. See our prior blog entries on the challenge to the CFPB’s funding structure for additional information.

In addition to the legal challenge brought by the ABA, it is likely that the legislature will seek to repeal the CFPB's new Rule, and Tim Scott, Senator of South Carolina, has already vowed to pursue legislative repeal of the same.

Baker Sterchi attorneys will continue to monitor the litigation arising out of the CFPB's Final Rule. Contact our Financial Services Practice Group for more information.

Jennifer Maloney Accepted into Product Liability Advisory Council

04 Apr 2024

Jennifer Maloney, a Member in Baker Sterchi’s St. Louis office, has been accepted as a Sustaining Member into the Product Liability Advisory Council (PLAC). Sustaining members, comprised of top regulatory, trial and appellate legal professionals from leading law firms worldwide, undergo thorough vetting by the organization's Board of Directors before receiving invitations to join.

Established in the 1980s, PLAC is dedicated to keeping product manufacturers and suppliers informed about industry-related issues and fostering collaboration with outside legal counsel to mitigate risk across the product life cycle. Corporate participants include individuals from the legal, regulatory, technical and risk departments of each member company.

Throughout her career, Maloney has advocated for businesses and insurance companies, focusing primarily on product liability, premises liability, personal injury and transportation matters. Actively engaged in the legal community, she is a member of the Bar Association of Metropolitan St. Louis and the Illinois Defense Counsel (IDC).

In recent years, Maloney has been recognized by The Best Lawyers in America for her product liability litigation defense practice. She has also been honored with the Missouri Lawyers Media Up & Coming Award and the IDC President’s Award. Maloney earned her law degree from the Southern Illinois University School of Law and is licensed to practice in Missouri and Illinois.

Baker Sterchi Attorneys Lead and Participate in 2024 MODL Trial Academy

03 Apr 2024

Baker Sterchi attorneys Briana Cowell (Kansas City) and Ruthie Vaughn (St. Louis) participated in the 2024 Missouri Organization of Defense Lawyers (MODL) "John L. Oliver, Jr." Trial Academy at the University of Missouri School of Law in Columbia, Missouri, held from March 27 to 29. Led by a distinguished faculty of 14 seasoned defense lawyers, including Baker Sterchi Members Clayton Crawford (Kansas City) and Joseph Swift (St. Louis), 35 students engaged in the program, assuming the roles of defense lawyers in a mock civil trial.

Cowell practices civil litigation, primarily defending product liability, wrongful death and personal injury cases. She is a member of the Earl E. O'Connor American Inn of Court and Propane Gas Defense Association. Cowell obtained her law degree from the University of Kansas School of Law and is licensed to practice in Missouri and Kansas.

Vaughn focuses on personal injury, medical malpractice and business litigation. She is a member of the Missouri Bar Association’s Young Lawyers Division and the Mound City Bar Association. Vaughn earned her law degree from Saint Louis University School of Law and is licensed to practice in Missouri.

Established in 1984, MODL aims to assist defense attorneys in delivering top-notch representation to clients through continuing legal education programs and various other initiatives.

Nurse Paralegal, Kansas City

02 Apr 2024

Our Kansas City office is seeking a skilled and motivated nurse paralegal. View the job description here.

Charniece Rollie Selected to Participate in DEI Certificate of Mastery & Capstone Program

01 Apr 2024

Charniece Rollie, Baker Sterchi’s Kansas City Office Administrator, has been chosen to join a DEI Certificate of Mastery & Capstone Program titled "Strategies for Promoting and Fostering a World-Class Culture of Inclusion." A collaboration between the Greater Kansas City Chamber of Commerce (GKCCC) and Authentico, the program spans 16 months and includes an academic curriculum, capstone project, roundtable interaction with thought leaders and individual coaching sessions.

Led by Dr. Andrea Hendricks, Chief Diversity, Equity, and Inclusion Officer at Authentico, and Dr. Shirley Davis, President of SDS Global Enterprises, the program is limited to a cohort of 30 individuals, including DEI Professionals, Human Resource leaders and industry managers and executives enthusiastic about exploring solutions for cultivating inclusive organizational environments that foster cultures of belonging. The inaugural session, held in March, included a kick-off luncheon attended by Baker Sterchi attorney Megan Sterchi Lammert as Rollie’s guest.

In her role as Office Administrator, Rollie oversees the day-to-day operations of the Kansas City office, drawing upon her extensive 25 years of experience in the legal field to enhance administrative efficiency across all facets of her work. Additionally, she actively contributes as a member of the firm’s DEI Committee and serves as the firm’s representative on ALFA International’s DEI Committee. Rollie regularly attends GKCCC diversity-related events, seeking insights to promote inclusivity within the firm and the broader community.

The Greater Kansas City Chamber of Commerce is a leading advocate for business and economic development in the Kansas City metropolitan area. Authentico, a full-service multicultural marketing and diversity, equity, and inclusion agency, focuses on forging meaningful connections to help brands expand their reach and achieve business objectives.

Kansas City Area Returns to Pre-Pandemic Jury Verdict Trends

01 Apr 2024

ABSTRACT: Yearly data released by the Greater Kansas City Jury Verdict Service shows the number of jury verdicts climbed back to pre-pandemic levels. In 2023, there was an increase in the average value of plaintiff-friendly jury verdicts even with outlier verdicts removed from the calculus. Jackson County, Missouri continues its streak of being the most plaintiff-friendly venue across the Kansas City area.

Number of Jury Trials Return to Pre-Pandemic Totals

According to the Greater Kansas City Jury Verdict Service, the total number of jury trials in the Kansas City metropolitan area has risen every year since the COVID-19 pandemic. In 2023, jury trials are up approximately 30% from 2022 and continue to rise toward pre-pandemic levels.

Greater Kansas City Jury Verdict Service Year-End Reports 2014-2023

Plaintiff-Friendly Verdicts Return to Pre-Pandemic Trend

In 2023, there were a total of 217 verdicts (cases oftentimes involve multiple verdicts). Of the verdicts reported, 48% (104 out of 217 claims) resulted in some amount of recovery for the plaintiff(s). In other words, defendant(s) obtained a full verdict in 52% of verdicts. This defense “win” percentage is similar to what we saw in 2022 with 51% of verdicts. However, the Greater Kansas City area saw a three-year stretch of nearly 60% defense verdicts from 2019 to 2021. The plaintiff-friendly trend seems to reflect the pre-pandemic trend more accurately, which saw plaintiff verdicts rise from 38% in 2014 to 48% in 2018.

However, those verdicts consider numerous categories of claims. Specifically, regarding auto-related claims, 78% of claims resulted in some amount of recovery for plaintiff(s). Of the six wrongful death verdicts (three auto-related, three other), plaintiff(s) were awarded compensation in 100% of those verdicts. The average verdict award in auto-related wrongful death cases was $23,613,333.

Overall Average Monetary Award for Plaintiffs Increased Last Year

The overall average value of favorable plaintiff verdicts, without outliers, increased considerably in 2023. The overall average of plaintiff verdicts in the Kansas City area in 2023 was $20,117,952, which included one $1.785 billion dollar verdict from the Western District of Missouri, and three verdicts totaling $70 million from Platte County. When the outlier verdicts are set aside, the average jury award for 2023 was $1,113,929.47. In 2022, excluding two outlier verdicts totaling approximately $53 million, the average plaintiff award was $564,213. In 2021, the average value of verdicts favoring plaintiffs, without outliers, was $635,000. The 2023 overall average plaintiff verdict value is a steep increase from the previous six-year average.

Jackson County, Missouri Continues Plaintiff-Friendly Run

Jackson County, Missouri has historically churned out more plaintiff-friendly verdicts than the other venues in Greater Kansas City, and 2023 was no exception. Of the 84 claims tried by Jackson County, Missouri juries, 55% favored the plaintiff, with the average award value of all plaintiff verdicts in Jackson County, Missouri being $1,305,793.

Additionally, Jackson County, Missouri juries handed out 13 verdicts worth $1 million or more, which represents more than a third of all million-dollar jury verdicts in the Greater Kansas City venues. Moreover, of the 45 verdicts across the Greater Kansas City venues valued between $100,000 and $999,999, more than half were in Jackson County, Missouri.

When Artificial Intelligence leads to Genuine Stupidity

28 Mar 2024

ABSTRACT: The Eastern District of the Missouri Court Appeals addresses the use of Artificial Intelligence in preparing appellate pleadings and more specifically, the citation to fictitious legal authority. The court noted that citation to such “bogus” authority was a flagrant violation of a litigant’s duty of candor to the court.

A February 13, 2024 opinion by the Missouri Eastern District Court of Appeals in Kruse v. Karlen addressed for its first time the use of generative A.I. to create fictitious legal authority and a litigant’s citation to that authority. The trial court in Kruse awarded a former employee, Molly Kruse (Former Employee), over $311,000 in unpaid wages, penalties, and attorneys’ fees in granting her motion for summary judgment for the former employers’ failure to pay her for work performed and two unsatisfied promissory notes given to secure the unpaid salary. Jonathan Karlen (Former Employer) filed a pro se appeal in the Eastern District, including a Record on Appeal, unsigned Appellate Brief, and Reply Brief, but no Appendix and other required pleadings. Former Employee filed a Motion to Strike for failure to comply with the Rules of Appellate Procedure on multiple issues, including inaccurate citations and fabricated legal authority, which the court took with the appeal.

The Court of Appeals first noted that the Former Employer’s pleadings nearly completely failed to comply with the Rules of Appellate Procedure. Despite being granted an extension of time to file the required Appendix on appeal, as of the date of the opinion it had still not been provided to the court. Former Employer further infringed the appellate rules by failing to articulate his Points Relied On for appeal and failing to follow specific requirements for properly preparing a Statement of Facts, Statement of Issues, Table of Contents, and Table of Authorities. All of these were grounds for the Eastern District to dismiss the appeal. To make matters worse, Former Employer filed a reply brief containing fictitious case citations, in which he admitted to hiring a supposedly licensed California legal “consultant”, but denied knowing the consultant would use A.I. in identifying relevant caselaw.

As such, the Eastern District addressed for its first time a litigant’s citation to legal authority fabricated by using generative A.I. By way of example, the court noted that Former Employer’s brief cited a quoted portion of a purported Missouri opinion Smith v. ABC Corporation. Both the legal quotation and the case itself are nonexistent, the case citation belonging to a Texas state court family law opinion. The Eastern District continued to note that Former Employer’s brief included citations to twenty-two fictitious cases, and only two citations to genuine caselaw.

Not surprisingly, the Eastern District noted that the citation to “bogus” legal authority constituted a flagrant violation of Former Employer’s duties to the court. Citing Rule 55.03, the court stated that by maintaining a claim, an attorney or party certifies that the legal contentions are supported by existing law or non-frivolous argument. As such, citation to fictitious authority, to either persuade a court or used against an opposing party, is an abuse of the adversarial system. For the significant violations of Rule 84.04 the court dismissed the appeal.

Following the dismissal, the Eastern District continued to the matter of sanctions for filing a frivolous appeal. Noting its discretionary authority to award monetary damages to the Former Employee, the court explained that an appeal is frivolous when it is so deficient that it strains the resources of the court and the opposing party. The appellate court pointed out that the court routinely grants unrepresented litigants reasonable accommodations so long that the court does not act as advocate, but Former Employer’s appellate brief went beyond simply faulty pleadings. His actions required Former Employee to expend unnecessary resources to, among other things, identify fabricated cases submitted to the court in support of what the Eastern District characterized as an appeal wholly lacking in merit. The court determined that awarding Former Employee damages towards attorneys’ fees of $10,000 as an appropriate message to others regarding the importance of compliance with court rules and providing the court with authentic authority supporting meritorious arguments.

In Kruse, the Eastern District made clear that the use of A.I. to generate fictitious authority would not be tolerated. Practitioners should note that as generative legal A.I. continues to evolve into greater capacities and expansion into diverse platforms, they must be mindful of its use both for themselves and by other parties in litigation.