In June, 2022, the U.S. Federal Trade Commission issued a sternly-worded order to Harley-Davidson, requiring it to honor existing right-to-repair laws. The primary issue was what the FTC stated was illegal warranty language that restricted customers from using aftermarket parts, or taking their bikes for service by anyone other than a Harley dealer. Such actions, the warranties stated, could void the owners’ warranties.
At the same time, a secondary problem the FTC drew attention to was the fact that the full terms of such warranties weren’t fully disclosed to customers in a single document. Instead, the warranties said, customers could directly contact an authorized dealer to get the full details. It also ordered Harley to cease this behavior, as well.
While this was seen as a positive step by many interested in right-to-repair reform within the U.S., this action by the FTC couldn’t recoup the losses experienced by Harley customers who felt that they were effectively held hostage to the terms of their warranties. Thus, in August, 2022, two right-to-repair class action lawsuits were filed in federal courts: one in Wisconsin, and one in California. As you may already have suspected, that’s not the end of the story.
On November 3, 2022, a third class-action lawsuit was filed in Chicago federal court. It claims that the Motor Company’s warranty policy violates existing U.S. antitrust laws because it disallows the use of aftermarket parts. The suit was filed by plaintiffs Jacqueline and Robert Assise, on behalf of both themselves and a class of similarly-situated customers who owned a Harley-Davidson roadgoing motorcycle under factory warranty, and also purchased compatible parts from August 1, 2018 through the present.
The 55-page class action complaint demands a jury trial to hear its claims, and spells out in detail the nature of both its claims and the multiple classes across multiple states (and the District of Columbia) enveloped within. It alleges that the Harley-Davidson warranties in question violated both federal and state antitrust laws, and requests unspecified financial relief for members of the Class, including payment of legal fees.
The filing argues that since Harley makes approximately 15 percent of its annual revenue from parts, it is clearly in the company’s best interest to maximize that revenue as much as possible—including by using its warranties as tools to force owners to stick to Harley OEM parts. It also makes a case for how a 24-month Harley warranty can effectively cost owners a lot of money.
As an example of how the costs can add up quickly, the plaintiffs purchased a new 2019 Harley-Davidson Tri-Glide on July 12, 2019, and proceeded to purchase OEM Harley parts for the next two years so that they wouldn’t void their warranty. The parts—not including taxes or labor costs for installation—totaled $2,868.52.
The court document goes on to quote specific language from a 2021 Harley warranty, including the very bluntly stated, “Genuine Harley-Davidson parts are engineered and tested specifically for use on your motorcycle. Insist that your authorized Harley-Davidson dealer uses only genuine Harley-Davidson replacement parts and accessories to keep your Harley-Davidson motorcycle and its limited warranty intact.”
That’s probably not incredibly surprising, but the next part may also be equally unsurprising.
The court filing alleges that even beyond the scope of its restrictive warranty language, Harley incentivizes dealers to deny warranty claims by making repair reimbursements differently available based on whether such repairs are covered under warranty. If they’re not covered under warranty, dealers may be reimbursed immediately. However, if they’re covered under warranty, dealers may have to wait up to 90 days to get reimbursed.
The document goes on to claim that “By incentivizing the dealers to void warranties, thus “flipping warranty situations into non-warranty situations,” Harley-Davidson is able to profit in two ways – first, by dodging the repair labor cost, and then making the part into revenue.”
This class-action lawsuit includes class members from 27 states and the District of Columbia, which also have state- and district-specific violations for which they seek legal relief and remuneration. The states (and district) involved are: Arizona, California, District of Columbia, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, and Wisconsin.
The filing states that the suit’s prayer for relief includes the Court finding that Harley’s conduct violates provisions of both the Sherman and Clayton Acts at the federal level, that class members be awarded both injunctive and damage relief, recover attorney and legal fees, recover both pre- and post-judgment interest “at the highest rate allowed by law,” and also be granted any such additional relief that the Court deems appropriate.
Plaintiffs are represented by the legal firm of Wolf Haldenstein Adler Freeman & Herz LLC. The suit was authored by attorney Carl Malmstrom of that firm. Neither he nor Harley representatives would issue comments on this litigation to the Courthouse News service, which is understandable since this is a pending legal matter.
If you’re interested in reading the full legal filing, we’ll include a link in our Sources.