DOES THE COMPELLED-SPEECH DOCTRINE LIMIT THE DUTY TO DISCLOSE PRODUCT DEFECTS?

By Robert J. Herrington¹, Michael E. McCarthy²

In recent years, plaintiffs’ lawyers have filed countless class actions under statutes like California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) alleging consumers were "deceived" because they bought a product with a "defect" that the manufacturer or retailer did not disclose. These cases share a common fact pattern: consumer buys product X and experiences a problem after some period of use. The consumer goes online and sees others have complained about something similar. Sometimes the consumer makes a claim under the product warranty but often does not. Eventually, a class action lawyer gets involved and files a complaint alleging that product X is "defective," defendant knew of the defect (pointing to publicly available complaints), and defendant should return the "price premium" associated with the alleged defect.

But consider the perspective of the manufacturer. No product is perfect or lasts forever, and products can have problems unrelated to design or manufacture, including from misuse or overuse. The company already provides a limited warranty covering actual defects in materials or workmanship and remains strictly liable for defects that cause physical injury. Does the company also have a duty to disclose or highlight problems that could occur in a small subset of products, which in effect, would require the company to criticize itself? As explained below, the answer, which may surprise some, is: "in certain situations, yes."

Yet one issue that has received little attention is whether the First Amendment has any bearing on this type of consumer-fraud theory. The compelled-speech doctrine generally limits what the government can require someone to say, with regulations that require controversial or nonfactual speech often violating the First Amendment. This paper explores the developing law on the duty to disclose product defects in California and how the compelled-speech doctrine may limit such a duty.