Automotive Manufacturers: Rising Litigation Risks Fuel Caution

As technology and regulations continue to reshape the automotive industry, product litigation is expanding. Plaintiffs are increasingly using proactive actions, such as recalls and service campaigns, as a springboard for alleged class-wide claims based on pre-sale knowledge of issues or insufficient remedies. Meanwhile, courts remain divided on class certification and standing as to uninjured class members, adding uncertainty for nationwide defense strategies. Disputes over damages models, particularly survey-based methods, such as conjoint analysis, have become central to class viability. The rapid growth of electric and autonomous vehicles also introduces new risks tied to batteries, data security, and software reliability.

To reduce these risks, manufacturers should anticipate how voluntary recalls, service campaigns, and software updates may be used as evidence of pre-sale knowledge or inadequate remediation, and plan communications, documentation, and remedy design accordingly.

Expanding Class Action Exposure Amid Recall Activity

Plaintiffs’ counsel are increasingly using manufacturers’ own recall materials as the foundation for class action claims, and these materials may later be cited as evidence of pre-sale knowledge or inadequate remedies. As such, automotive companies should carefully coordinate recall communications and documentation strategies among legal, compliance, and technical teams.

These mitigation steps are particularly important because even well-intentioned, proactive actions, such as voluntary recalls and service campaigns, can invite litigation scrutiny and a putative class action. Plaintiffs’ lawyers are closely monitoring public filings, National Highway Traffic Safety Administration investigations, and manufacturer-issued technical service bulletins (TSBs), and using related documentation to allege pre-sale knowledge of an alleged defect that was not disclosed to consumers before sale.

Courts have shown a growing willingness to allow such claims to proceed, even where manufacturers have offered comprehensive remedies. Often, the claims will challenge the sufficiency of the offered remedy. In Fisher v. FCA US LLC, the issuance of two TSBs was deemed sufficient to establish pre-sale knowledge, allowing fraud claims to advance despite a recall offering free repairs. Similarly, recalls issued shortly after a plaintiff’s purchase have been interpreted as implying preexisting awareness of the alleged defect, often opening the door to asymmetrical discovery.

Standing and Class Certification

To protect against the risk of expansive class certification, automotive manufacturers should take early steps to document product performance data, warranty claims, and repair histories that demonstrate how few vehicles experience the alleged issue in the field. Developing this evidence before litigation arises can help frame individualized questions of injury and causation that weigh against certification.

Manufacturers should also ensure that recall and customer service records are aligned with real-world manifestation data, which will allow defense teams to clearly distinguish between isolated incidents and systemic defects when responding to class allegations.

These strategies have taken on new significance as courts continue to grapple with how to treat uninjured class members in automotive defect litigation—especially with there being a “three-way split” between circuits. Under the strict approach of the US Courts of Appeals for the Second and Eighth Circuits, courts decline to certify any class containing uninjured members. The US Courts of Appeals for the First and District of Columbia Circuits apply a middle-ground standard, permitting certification if the number of uninjured class members is more than de minimis. In contrast, the Seventh and Ninth Circuits take a more lenient view, allowing certification even where many class members have suffered no injury.

In LabCorp v. Davis, the US Supreme Court decided not to resolve the standing issue, leaving the “three-way circuit split” in place, with significant implications for nationwide class actions generally, but particularly for automotive cases involving alleged defects that affect only a small percentage of vehicles. This uncertainty reinforces the need for automotive companies to implement early case assessments that focus on injury evidence and individualized experiences.

It should be noted that although LabCorp left the circuit divide unresolved, Justice Brett Kavanaugh’s dissent signaled potential future scrutiny, arguing that classes including both injured and uninjured members should not satisfy Rule 23’s predominance requirement.

Damages Theories Under Scrutiny

To address the risk of inflated or speculative class-wide damages, automotive manufacturers should engage early with economic and technical experts to evaluate potential damages models before certification. Developing a defensible record of vehicle performance, resale data, and repair costs can help identify inconsistencies in plaintiffs’ proposed methodologies and expose models that fail to reflect real-world market behavior. Coordinating expert strategy early, particularly on how damages correspond to specific legal theories, can strengthen admissibility arguments and limit exposure to unreliable or abstract calculations.

As courts continue to scrutinize the alignment between plaintiffs’ damages methodologies and their theories of liability, implementing these measures to manage risk exposure has become crucial. Plaintiffs often invoke “benefit of the bargain” theories, alleging overpayment at the time of purchase, and will use different methodologies across jurisdictions. For example, California courts allow for a damages model based off the average cost of repair, while Florida courts may allow for a method based on diminution in value.

The most frequently used model across many jurisdictions is a conjoint analysis, which is a survey-based technique presented by expert witnesses that aims to measure consumers’ willingness to pay for vehicles with or without the alleged defect at the time of purchase. Critics argue, however, that these surveys bear little resemblance to consumers’ real-world purchasing behavior and fail to account for market dynamics, such as supply-side considerations and variable manifestation rates.

Although most district courts continue to accept conjoint analysis, a growing number of decisions have begun to question its economic reliability. Courts have increasingly scrutinized conjoint studies for methodological gaps, particularly the omission of supply conditions and actual transaction data. Notably, the Ninth Circuit even allows for presentation of a modeled conjoint survey without conducting the survey itself to demonstrate the alleged damages figure, highlighting the importance of challenging such evidence early.

The Future of Electric, Connected, and Autonomous Vehicle Litigation

To stay ahead of emerging risks tied to electrification and vehicle connectivity, automotive manufacturers should strengthen their governance frameworks for safety communications, data handling, and software management. This includes implementing cross-functional review of marketing representations, maintaining detailed records of software updates and over-the-air modifications, and conducting regular cybersecurity assessments of vehicle systems.

Transparent consumer disclosures and early engagement with technical experts can reduce exposure to claims that remedial updates or range estimates were misleading or incomplete. As electric and autonomous vehicle technologies advance, documenting the rationale for engineering and communication decisions will be key to defending against future product and data-related claims.

Presently, claims centered on alleged defects in electric vehicle (EV) batteries and charging systems have continued to rise, including inaccurate range representations, premature battery degradation, and fire risks linked to thermal runaway events. In a recent case involving more than 30,000 EVs, plaintiffs challenged a manufacturer’s recall that instructed consumers to limit charging capacity to 80% to mitigate fire risk, alleging that the remedy was insufficient because it did not include full battery replacement.

Advanced driver assistance systems (ADAS) and representations about autonomous driving capabilities have also drawn litigation claims, asserting misrepresentations about performance and safety functions. Beyond product defects, data privacy and cybersecurity risks have emerged as new fronts in automotive litigation. Zero emissions and autonomous vehicles now essentially function as “computers on wheels,” collecting location, driver behavior, and telematics data. Recent data breach cases have highlighted vulnerabilities in vehicle network systems, with one matter involving exposure of location data from more than 800,000 vehicles.

As legal, privacy, and software obligations converge, embedding legal oversight within technology and cybersecurity functions will be essential to managing risk and minimizing future litigation exposure.