Dan Bennett v. CMH Homes, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0272p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

DAN BENNETT; KAREN BENNETT, ┐
Plaintiffs-Appellants/Cross-Appellees, │
│
│ Nos. 13-5423/5560
v. │
>
│
CMH HOMES, INC., │
Defendant-Appellee/Cross-Appellant. │
┘
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 3:08-cv-01212—Kevin H. Sharp, District Judge.
Argued: January 28, 2014
Decided and Filed: October 30, 2014

Before: MERRITT, BOGGS, and STRANCH, Circuit Judges.

_________________

COUNSEL

ARGUED: Kirk L. Clements, HAYNES, FREEMAN & BRACEY, PLC, Goodlettsville,
Tennessee, for Appellants/Cross-Appellees. William S. Rutchow, OGLETREE, DEAKINS,
NASH, SMOAK & STEWART, P.C., Nashville, Tennessee for Appellee/Cross-Appellant. ON
BRIEF: Kirk L. Clements, HAYNES, FREEMAN & BRACEY, PLC, Goodlettsville,
Tennessee, for Appellants/Cross-Appellees. William S. Rutchow, Jennifer S. Rusie,
OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Nashville, Tennessee for
Appellee/Cross-Appellant.

MERRITT, J., delivered the opinion of the court, in which BOGGS, J., joined.
STRANCH, J. (pp. 8–14), delivered a separate dissenting opinion.

1
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 2

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OPINION
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MERRITT, Circuit Judge. This case asks whether the Magnuson-Moss Warranty Act
extends federal protection to warranties guaranteeing the proper installation of plaintiffs’
“manufactured home.” The Act limits its protections to “consumer products,” so the core issue
is whether the plaintiffs’ “manufactured home” is a “consumer product.”1 As a necessary
element of the plaintiffs’ only federal claim in an action between non-diverse parties, the scope
of the Act raises questions of both federal jurisdiction over the dispute and the merits of the
plaintiffs’ claim. Without discussing whether plaintiffs’ home is a “consumer product,” the
district court ruled that the defendant had violated the Act and Tennessee law by improperly
installing the plaintiffs’ home. The plaintiffs’ appealed the size of their damage award, and we
questioned at oral argument whether there is federal jurisdiction in this case. After supplemental
briefing by the parties, we hold that we do have jurisdiction but that the plaintiffs’ home is not a
“consumer product.” As such, plaintiffs’ claim under the Magnuson-Moss Warranty Act fails on
the merits and we dismiss it. We remand for the district court to decide whether it wishes to
exercise supplemental jurisdiction over the plaintiffs’ remaining state-law claims.

I.

In 2004, the plaintiffs’ home in Rockvale, Tennessee, burned down. To replace it, they
purchased a 2180-square-foot, “triple-wide” manufactured home from the defendant, with
upgrades like multiple porches and decorative brick, for a total of $160,230. As part of the sales
agreements, defendant was responsible for “normal delivery and installation” of the new home
on the plaintiffs’ land. Further, defendant warranted that, “[f]or new homes, installation at the
initial homesite will be completed in accordance with applicable governmental requirements.”

1
The Magnuson-Moss Warranty Act provides a federal cause of action for a “consumer who is damaged by
the failure of a supplier, warrantor, or service contractor to comply with any obligation . . . under a written warranty
[or] implied warranty.” 15 U.S.C. § 2310(d). Under the Act, a “consumer” is defined as “a buyer . . . of any
consumer product.” 15 U.S.C. § 2301(3). The Act defines a “consumer product” as “any tangible personal property
which is distributed in commerce and which is normally used for personal, family, or household purposes,”
including attachments to real property but excluding real property. 15 U.S.C. § 2301(1).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 3

Defendant delivered the home in three pieces and installed it in March 2005, although
much of the installation process remains a mystery. At trial, only one of the several members of
the installation crew was identified. He was not licensed to install manufactured homes as
required by the State of Tennessee. See T.C.A. § 68-126-404(a) (“No person may install a
manufactured home in this state unless such person is licensed by the commissioner as an
installer.”).

Plaintiffs immediately began noticing defects that suggested the home was not level when
installed, and they notified the defendant before they closed on the house. Defendant assured
plaintiffs that it would repair and level the home, and plaintiffs closed on the home in reliance on
defendant’s assurances. After several years of inspections and repair efforts, defendant never did
level or repair the home to the plaintiffs’ satisfaction.

Plaintiffs eventually filed suit in the United States District Court for the Middle District
of Tennessee in Nashville. Their complaint broadly alleged, among other claims, breach of
contract in one count and federal breach of warranty in another. Within their breach-of-warranty
count, plaintiffs complained that “Defendants[’] actions outlined herein constituted a breach of
warranty as the Defendants have failed to act pursuant to the warranties and/or in conformity
with 15 U.S.C.A. § 2304,” the Magnuson-Moss Warranty Act, “and/or other applicable law.”

Defendant quickly moved to compel arbitration and dismiss the case. Judge Echols
entered an ordering denying defendant’s motion, finding that the arbitration provisions in the
applicable sales agreement were unenforceable because they were unconscionable and the sales
agreement was a contract of adhesion. Consistent with the district court’s ability to “look
through” an arbitration agreement and consider jurisdiction, citing Vaden v. Discover Bank,
556 U.S. 49, 62 (2009), Judge Echols concluded without further analysis that plaintiffs “allege a
claim for breach of warranty under the Magnuson-Moss Warranty Act . . . over which the Court
has federal question jurisdiction.”

Judge Echols then passed the case to Magistrate Judge Brown for pre-trial processing. In
the initial case-management order entered on March 11, 2009, Magistrate Judge Brown noted
Judge Echols’ ruling on the arbitration issue but also noted that “[defendant’s] counsel raised the
possibility at the conference that this Court might lack jurisdiction . . . .” Magistrate Judge
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 4

Brown advised counsel that “if there is a question of jurisdiction, Defendant’s counsel should file
a motion to dismiss on those grounds as soon as practicable.” Defendant’s counsel never did,
and filed an answer on March 25, 2009, that did not discuss jurisdiction.

After mentioning the issue again in another case-management order entered on March 16,
2009, Magistrate Judge Brown wrote on April 22, 2009, that “in view of Judge Echols’ decision
on the arbitration matter . . . there is no jurisdiction question at the present time.” There was no
further mention of jurisdiction in the lower court, and the case moved forward under the
assumption that plaintiffs’ Magnuson-Moss Warranty Act claim conferred federal jurisdiction.

The case then proceeded to a bench trial before Judge Sharp. Judge Sharp construed the
complaint as alleging a breach-of-contract claim under Tennessee law as well as a “breach of
warranty and/or violation of Magnuson-Moss Warranty Act” claim. Bennett v. CMH Homes,
Inc., No. 3:08-01212, 2012 WL 5416481 at *10 (M.D. Tenn. Nov. 6, 2012) (quoting Temple v.
Fleetwood Enters., Inc., 133 F. App’x 254, 268 (6th Cir. 2005)). Judge Sharp found that
defendant had breached both the contract and its warranties by failing to properly install and
level the house, and also by failing to install the house in accordance with applicable
governmental requirements—specifically, by failing to use installers who were licensed as
required by Tennessee law. Id. at *8-10; cf. T.C.A. § 68-126-404(a). Having determined
liability, Judge Sharp deferred ruling on the appropriate remedy and damages in hopes that the
parties would settle. Id. at *11. They did not, and Judge Sharp awarded $39,238.29 in damages
to the plaintiffs. Bennett v. CMH Homes, Inc., No. 3:08-01212, 2013 WL 146034 at *3-10, *15
(M.D. Tenn. Jan. 14, 2013). Plaintiffs appealed the amount of their award, and defendant cross-
appealed to challenge both liability and the damages award.

At argument, we questioned the parties on whether the manufactured home is a
“consumer product” and whether there is federal jurisdiction in this case. We learned that
neither party was confident in federal jurisdiction when the parties originally filed. Rather, the
parties seemed to have agreed to litigate in federal court. Counsel did not address the
jurisdictional issue when Magistrate Judge Brown provided them with an opportunity. Because a
“lack of federal jurisdiction cannot be waived or be overcome by an agreement of the parties,”
Mitchell v. Maurer, 293 U.S. 237, 244 (1934), we requested further briefing on the issue.
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 5

II.

Whether plaintiffs’ home is a “consumer product” appears at first to be both a
jurisdictional question and a merits question. It is both an element of the statutory cause of
action allegedly providing subject-matter jurisdiction in this case, as well as a “disputed fact
[that] goes to the merits” of that claim. Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co.,
491 F.3d 320, 330 (6th Cir. 2007). In a recent Title VII case, the Supreme Court had before it a
similar “subject-matter jurisdiction/ingredient-of-claim-for-relief dichotomy.” Arbaugh v. Y & H
Corporation, 546 U.S. 500, 511 (2006). The Court explained that “[s]ubject matter jurisdiction
in federal-question cases is sometimes erroneously conflated with a plaintiff’s need and ability to
prove the defendant bound by the federal law asserted as the predicate for relief—a merits-
related determination.” Id. The Court clarified that a plaintiff need not prove the entire cause of
action to obtain jurisdiction, but rather must only plead a “colorable claim” that “arises under a
federal law.” Id. at 513 (citing 28 U.S.C. § 1331) (internal edits omitted). To plead such a
claim, a plaintiff must prove “jurisdictional” facts but need not prove facts that go to the merits
of the plaintiff’s federal cause of action. Id. at 514. Our court has said that under such
circumstances where a question of “subject-matter jurisdiction also implicates an element of the
cause of action,” as here, “then the district court should ‘find that jurisdiction exists and deal
with the objection as a direct attack on the merits of the plaintiff’s claim.’” Gentek, 491 F.3d at
330 (quoting Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)).

Because the question of whether plaintiffs’ home is a “consumer product” implicates both
jurisdiction and the merits of plaintiffs’ claim, we find jurisdiction and address the question as a
merits issue.2 Arbaugh, 546 U.S. at 513. Although not addressed below, whether the definition
of “consumer product” includes plaintiffs’ home is a matter of statutory interpretation and a
question of law, see Miller v. Herman, 600 F.3d 726, 737 (7th Cir. 2010), that we may answer in
the first instance, see City Mgmt. Corp. v. U.S. Chem. Co., Inc., 43 F.3d 244, 255 (6th Cir. 1994).

2
Another provision of the Magnuson-Moss Warranty Act’s cause of action is that it contains a $50,000
amount-in-controversy requirement. 15 U.S.C. § 2310(d)(3)(B). Nevertheless, we are permissive with this
requirement, and it is the defendant’s burden to “prove to a legal certainty that the plaintiff has not satisfied the
amount in controversy requirement.” Schultz v. Gen. R.V. Ctr., 512 F.3d 754, 760 (6th Cir. 2008). Neither party
challenges the amount in controversy in this case, and thus we assume without decision that the amount is sufficient.
Cf. Miller v. Herman, 600 F.3d 726, 728 n.1 (7th Cir. 2010).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 6

The text of the Magnuson-Moss Warranty Act and its legislative history provide the
guidance necessary to resolve this question of interpretation. During Senate hearings
considering the Act, Senator Broyhill of North Carolina asked Senator Moss, a sponsor of the
Act, “[w]ould a house be within the definition of consumer product?” 102 Cong. Rec. 30171,
31323 (1974). Senator Moss answered that “[a] house would not fall within the definition of
consumer product since a house is not ‘tangible personal property.’” Id. Here the house is not a
house-trailer or a mobile home designed to be moved. Once it is constructed on the site, it is
permanent. It would be taxed as real property and, at 2180 square feet, has the size and
appearance of a regular house. The plaintiffs’ home is more like a house than “tangible personal
property,” and thus is not a “consumer product” as was intended to be regulated by the
Magnuson-Moss Warranty Act. See 15 U.S.C. § 2301(1).

Additionally, “[i]t is a fundamental canon of statutory construction that, unless otherwise
defined, words will be interpreted as taking their ordinary, contemporary, common meaning.”
Sandifer v. U.S. Steel Corp., 134 S. Ct. 870, 876 (2014) (internal citation and quotation marks
omitted). Dictionary entries for the words “consumer” and “consumer goods” during the general
era of the Magnuson-Moss Act’s enactment describe products that are expendable or meant to be
replaced periodically—not a permanent dwelling.3 In contrast, Tennessee’s definition of
“manufactured home” suggests something more substantial and permanent:

a structure, transportable in one (1) or more sections, which, in the traveling
mode, is eight (8) body feet or more in width, or forty (40) body feet or more in
length, or, when erected on site, is three hundred twenty (320) or more square
feet, and which is built on a permanent chassis and designed to be used as a
dwelling with or without a permanent foundation when connected to the required
3
See II The Oxford English Dictionary 886 (1933) (defining “consumer” as “[h]e who or that which
consumes, wastes, squanders, or destroys” and also as “[o]ne who uses up an article produced”); Random House
Unabridged Dictionary 437 (2d ed. 1993) (defining “consumer” as “a person or thing that consumes” and defining
“consume” as “to destroy or expend by use; use up”); Webster’s New International Dictionary of the English
Language 573 (2d ed. 1946) (defining “consumer” as “[o]ne who or that which consumes” and defining “consume”
as “[t]o destroy the substance of,” “[t]o use up (time),” and “[t]o eat or drink up (food)”); Webster’s Third New
International Dictionary 490 (1986) (defining “consumer” as “one that consumes” and “one that utilizes economic
goods” and defining “consume,” inter alia, as “to destroy or do away with completely,” “to use up,” and “to utilize
(an economic good) in the satisfaction of wants”). See also Random House Unabridged Dictionary 437 (2d ed.
1993) (defining “consumer goods” as “goods that are ready for consumption in satisfaction of human wants, as
clothing or food, and are not utilized in any further production” (emphasis added)); Webster’s New International
Dictionary of the English Language 573 (2d ed. 1946) (defining “consumers’ goods” as “[e]conomic goods that
directly satisfy human wants or desires, such as food, clothes, etc.” (emphasis added)). Another dictionary more
broadly defines “consumer goods” as “economic goods that directly satisfy human wants or desires” but lists the
term as synonymous with “consumer items.” Webster’s Third New International Dictionary of the English
Language 490 (2d ed. 1946).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 7

utilities, and includes the plumbing, heating, air conditioning, and electrical
systems contained in the structure.

T.C.A. § 68-126-202(2).4 Although a manufactured home within Tennessee’s definition might
conceivably be considered a “consumer product,” the size, construction, and permanence of the
plaintiffs’ home illustrate that their home is not a “consumer product.” As such, their federal
cause of action fails on the merits.

III.

The district court must now determine whether it wishes to exercise supplemental
jurisdiction over the plaintiffs’ state law claims. The district court’s ability to exercise
“supplemental jurisdiction does not disappear when the federal claim that gave rise to original
jurisdiction in the first place is dismissed.” Orton v. Johnny’s Lunch Franchise, LLC, 668 F.3d
843, 850 (6th Cir. 2012) (citation omitted); see also Arbaugh, 546 U.S. at 514. Rather,
“[f]ollowing such a dismissal, the district court in its discretion may properly choose whether to
exercise § 1367(a) jurisdiction over the supplemental state-law claims,” but “such a decision is
‘purely discretionary.’” Orton, 668 F.3d at 850. We remand so that the district court may
exercise that discretion in the first instance and “resolve any confusion respecting the resolution
of plaintiffs’ state law claims.” Neague v. Cynkar, 258 F.3d 504, 509 (6th Cir. 2001).

IV.

We DISMISS plaintiffs’ claim under the Magnuson-Moss Warranty Act, and REMAND
for further proceedings consistent with this opinion.5

4
Federal law defines “manufactured home” identically. 42 U.S.C. § 5402(6).
5
We do not agree with our dissenting colleague that the meaning of a “consumer” product has changed
over time and now includes stationary homes like “manufactured” homes. The Magnuson-Moss Warranty Act has
not been amended and its text continues to cover only “consumer” products. The Act does not mention “homes”
whether “manufactured,” “modular,” “mobile,” “stick-built” or otherwise. After the Act was passed, the FTC, by
regulation, advised that, in its opinion, “consumer” products included “boats,” “automobiles,” and “mobile homes.”
No FTC or HUD regulation has ever purported to amend the warranty statute to define “consumer” products to
include “manufactured,” “modular” or other stationary homes erected in place.
Our dissenting colleague apparently also believes that the National Manufactured Housing and Safety Act,
42 U.S.C. §§ 5401-5426, adopted in 1974, as amended in 1980, 1981 and 1998, somehow amends the Magnuson-
Moss Warranty Act and changes its original text and meaning; but the Safety Act does not purport to amend in any
way or affect the meaning of the Warranty Act. The later Manufactured Housing Act does not even mention
warranties or the Warranty Act. It deals with such things as wiring, plumbing and other building-code-type
requirements. The Safety Act does not purport to create a private right of action but rather in § 5410 creates civil
and criminal penalties and in § 5411 allows the government to bring actions for injunctive relief. The only private
right of action for damages is under the Magnuson-Moss Act and its meaning remains unchanged.
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 8

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DISSENT
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STRANCH, Circuit Judge, dissenting. This case presents the question of whether
manufactured homes are consumer products covered by the Magnuson-Moss Warranty Act
(MMWA). 15 U.S.C. §§ 2301–2312. This is not an easy question in the ever-changing world of
home construction, particularly in light of the group of similar but differently named products
that includes mobile homes, manufactured homes, and modular homes. The majority finds
jurisdiction to be lacking on the basis that plaintiffs’ home has sufficient permanence to be
excluded from the MMWA. While it is true that the MMWA applies only to warranties for
“tangible personal property,” 15 U.S.C. § 2301(1), the Act makes clear that it includes property
that would be designated under many state-law regimes as real-property fixtures. In light of the
uncertainty this creates, I would opt for the virtue of predictability. I would adopt the categorical
approach of the governing regulatory agencies, the Federal Trade Commission and Department
of Housing and Urban Development, and distinguish MMWA coverage based on the regulatory
regime to which the home is subject or to which the manufacturer has chosen to subject it. I
therefore respectfully dissent.

The MMWA was created “(1) to make warranties on consumer products more readily
understood and enforceable, (2) [and] to provide the Federal Trade Commission (FTC) with
means of better protecting consumers . . . .” House Report No. 93-1107 on the Magnuson-Moss
Warranty--Federal Trade Commission Improvement Act June 13, 1974. The Act achieves these
purposes by providing a remedy for certain warranty breaches related to “consumer products.”
15 U.S.C. § 2301(1); Gentek Bldg. Products, Inc. v. Sherwin-Williams Co., 491 F.3d 320,
323-324 (6th Cir. 2007). It defines “consumer products” as

any tangible personal property which is distributed in commerce and which is
normally used for personal, family, or household purposes (including any such
property intended to be attached to or installed in any real property without regard
to whether it is so attached or installed).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 9

15 U.S.C. § 2301(1).1

Some background is helpful before deciding whether the Bennetts’ home falls into the
category of “consumer products”: Federal and state law establishes three main categories of
homes that are relevant in the present case: manufactured homes, modular homes, and stick-built
(or site-built) homes. Stick-built homes are built using traditional construction techniques,
largely on the final home site. As the majority notes, such homes were not intended to fall
within the purview of the MMWA.

Until the late 1970’s, manufactured homes were generally called “mobile homes.” The
term “mobile home” was used in federal legislation in the National Housing Act, 12 U.S.C.
§§ 1701, 1715z, the United States Housing Act of 1937, 42 U.S.C. § 1437, and the Housing and
Community Development Act of 1974, 42 U.S.C. § 5401. For example, the Housing and
Community Development Act of 1974 defined mobile home as

a structure, transportable in one or more sections, which is eight body feet or more
in width and is thirty-two body feet or more in length, and which is built on a
permanent chassis and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air-conditioning, and electrical systems contained therein;

42 U.S.C. § 5402(6) (1974).

Many are not built to be actually mobile, however. See Molly A. Sellman, Manufactured
Housing: The Invalidity of the ‘Mobility’ Standard, 19 Urb. Law. 367, 374 (1987). Their
mobility is defined by the fact that they are built at a factory and transported, via a built-in
chassis, wheels, and axle, to a person’s property where they will be affixed and never moved
again. Id. In response to a negative stigma against “mobile homes,” the industry responded by
coining the term “manufactured home” that—though naming the same product—was intended to
impart a better impression.

The “manufactured-home” terminology has thoroughly replaced “mobile home” in
federal and Tennessee law. In 1980, Congress amended federal housing laws. In doing so, the

1
Cf. Tenn. Code § 67-5-501(9)(A) (defining “real property” to include fixtures). See also Tenn. Comp. R.
& Regs. 1320-5-1-.27(2) & Tenn. Dept. of Rev. Priv. Ltr. Rul. 05-11 (June 8, 2005) (both noting that there is no
sales and use tax on tangible personal property which becomes a fixture; such property is taxed as real property).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 10

three acts identified above were amended by striking out “mobile home” each place it appears
and inserting in lieu thereof “manufactured home.” Housing and Community Development Act
of 1980, Pub. L. No. 96-399, § 308, 94 Stat 1614 (1980). The amendment changed the definition
of manufactured homes to cover larger homes, as well as any building that meets all the
requirements to be considered a manufactured home except the size requirements and that is built
to the manufactured home building code established by the Secretary of Housing and Urban
Development. Id. at § 308(d)(B). Thus, under federal law, manufactured homes literally became
mobile homes under a different name. Tennessee also simply replaced the term “mobile home”
with “manufactured home” in its regulations. See Tenn. Code § 68-126-202(2) & (4) (providing
that the structure is a “mobile home” if built before June 15, 1976 and a “manufactured home” if
built after June 15, 1976). The Tennessee Court of Appeals has found the difference between a
“mobile home” and a “manufactured home” a “difference without a distinction.” Beacon Hills
Homeowners Assn., Inc. v. Palmer Props., Inc., 911 S.W.2d 736, 738 (Tenn. Ct. App. 1995).

At the same time that mobile homes were becoming manufactured homes, the
homebuilding industry also began to develop “modular” approaches to homebuilding. Like
manufactured homes, a modular home is largely manufactured somewhere away from the
eventual home site and brought to the local home site for installation. Under Tennessee law, a
“Modular building unit” is “a structural unit, or preassembled component unit, including the
necessary electrical, plumbing, heating, ventilating and other service systems, manufactured off-
site and transported to the point of use for installation or erection, with or without other specified
components, as a finished building.” Tenn. Code § 68-126-303(8). As may be apparent from
this definition, modular building units could include homes that also meet the definition of
manufactured homes.

The primary difference between a modular home and a manufactured home is the form of
regulation to which the home is subject. Manufactured homes are federally regulated, pursuant
to the National Manufactured Housing Construction and Safety Standards Act of 1974, 42
U.S.C. § 5401 et seq. Under this Act, the United States Department of Housing and Urban
Development (HUD) has developed standards and inspection mechanisms for manufactured
housing, called the HUD code. See 24 C.F.R. § 3280.1 et seq. and § 3282.1 et seq. Modular
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 11

homes, on the other hand, are subject to state or local building codes, either those that are
applicable to stick-built houses or specific building codes designated by state law.
See Tenn. Code § 68-126-301 et seq. (Tennessee Modular Building Act); Tenn. Comp.
R. & Regs. 0780-02-13.02 (naming the applicable building codes for modular homes in
Tennessee). If a manufactured home will be erected or installed only on a “site-built permanent
foundation,” the manufacturer may choose whether to certify the home under the HUD code, in
which case it is treated as a manufactured home, or under the relevant state-law building codes,
in which case it is treated as a modular home. 24 C.F.R. § 3282.12. The record shows
that the Bennetts’ home was categorized as a manufactured home, subject to the HUD codes.
See R. 63-2 at Page ID 426.

Returning to the MMWA, I begin by noting that both the Federal Trade Commission
(FTC), which administers the Act, and HUD have concluded that manufactured (or mobile)
homes are consumer products for the purposes of the Act. In 1975, the FTC issued the
Magnuson-Moss Warranty Act Implementation and Enforcement Policy which specifically
defined mobile homes as a consumer product covered by the MMWA. 40 Fed. Reg. 25,721,
25,722 (1975) (“Consumer product as defined in the Act includes the following items, and any
other items that are tangible personal property and are normally used for personal, family, or
household purposes: boats . . . motor homes, automobiles, mobile homes . . . .” (emphasis
added)). In part, this conclusion appears to have been grounded in the statutory text which
“includes products which are normally intended to be, or which are at the time of sale, fixtures to
real property” in the definition of consumer products. Id.; see 15 U.S.C. § 2301(1). The FTC
later articulated its general approach to defining consumer products in an interpretive rule:
“Where it is unclear whether a particular product is covered under the definition of consumer
product, any ambiguity will be resolved in favor of coverage.” 16 C.F.R. § 700.1(a). HUD
likewise concluded that the Act applies to manufactured homes. In its 1996 “Manufactured
Home Consumer Manual Guide” (that is, a guide to manufacturers on how to write consumer
manuals), the Department instructed manufacturers that any written warranties included in a
consumer manual had to be compliant with the MMWA. 61 Fed. Reg. 10,858, 10,864 (1996).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 12

In contrast to mobile homes, the FTC found no MMWA coverage for modular homes. In
1977, the FTC issued an Advisory Opinion determined that modular homes do not qualify as
consumer products for the purposes of the MMWA. 42 Fed. Reg. 37,440, 37,440–41. In the
opinion, the FTC reiterated that mobile homes qualify as consumer products under MMWA and
differentiated modular homes on the basis that they are regulated by modular-home specific
building codes—a list of which were included in the appendix of the opinion—or are built
according to state building codes for modular homes. Id. The appendix list did not include the
HUD code, which governs manufactured homes.

None of the administrative pronouncements described above were promulgated in
exercise of the FTC’s or HUD’s authority to make rules carrying the force of law, so Chevron
deference does not apply. “[I]interpretations contained in formats such as opinion letters are
‘entitled to respect’ under [the] decision in Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944),
but only to the extent that those interpretations have the ‘power to persuade.’” Christensen v.
Harris Cnty., 529 U.S. 576, 587 (2000). The Fifth Circuit, moreover, has stated that “because
the FTC is vested with various rulemaking authority under the MMWA, its views concerning the
scope of the MMWA would be entitled to great weight.” Boelens v. Redman Homes, Inc.,
748 F.2d 1058, 1063 n. 6 (5th Cir. 1984).

In deciding whether the interpretation is persuasive, this court examines the
“‘thoroughness evident in [the interpretation’s] consideration, the validity of its reasoning, its
consistency with earlier and later pronouncements.’” OfficeMax, Inc. v. United States, 428 F.3d
583, 595 (6th Cir. 2005) (quoting United States v. Mead Corp., 533 U.S. 218, 228 (2001)). In
assessing the validity of its reasoning, we look “to the statute’s text and design, including
whether the regulation is ‘consistent with the congressional purpose.’” Southern Rehabilitation
Grp., P.L.L.C v. Sec’y of HHS, 732 F.3d 670, 685 (6th Cir. 2013) (internal citations and
quotation marks omitted). As the Seventh Circuit has recognized, the FTC regulations were
reached after thorough consideration, including, for some, a notice-and-comment process that
was not required by the Administrative Procedure Act, and the agency “has adhered to its
interpretive positions consistently since the 1970s.” Miller v. Herman, 600 F.3d 726, 734 (7th
Cir. 2010).
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 13

The agencies’ interpretation is also consistent with the text and legislative intent of the
MMWA. As the majority notes, Representative Moss stated in a colloquy concerning the
MMWA that houses would not fall within the Act’s definition of “consumer product.” See
120 Cong. Rec. 30,171, 31,323. In the same hearing, Representative Moss introduced an
investigatory report that the committee staff had compiled, revealing problematic warranty terms
in a range of consumer products; that report included mobile homes as one of the categories of
products examined. See 120 Cong. Rec. 30,171, 31,317. As noted above, those products that
were categorized as mobile homes in 1974, when the Act was being debated, are now
categorized as manufactured homes under federal law.

Two aspects of the structure of the MMWA definition further support the FTC’s and
HUD’s interpretation. First, the definition explicitly includes those products that would
otherwise be considered fixtures, such as furnaces, garbage disposals, and the like. Whether a
product is permanently installed in real property, therefore, does not resolve the question of
whether that product is a “consumer product” under the MMWA. Second, the Act favors
categorical approaches to determining whether a certain product is a “consumer product.” A
frequent issue with regard to the definition is whether a product is for consumers or for
commercial use. The Act follows a categorical approach to this question, including in the
definition property “which is normally used for personal, family, or household purposes,”
regardless of whether the particular property at issue in a given case was actually used for such
purposes. 15 U.S.C. § 2301(1). Comparably, rather than determine, for any given mobile home,
how permanently it was installed and how large it was, the FTC followed a categorical rule: if
the home is subject to federal regulation, it is personal property and subject to the MMWA, and
if the home is subject to state building codes (like other, stick-built houses), it is real property
and falls outside the scope of the Act. The FTC’s choice to use a similar categorical approach to
distinguish the products before us is therefore sensible.

For the above reasons, grounded in the structure and legislative history of the MMWA, I
would find the FTC’s and HUD’s interpretations to be persuasive. However, there is another
reason, apart from the persuasiveness of the interpretations, which would lead me to include the
Bennetts’ home within the “consumer products” definition. It appears that “The Georgetown”
Nos. 13-5423/5560 Bennett, et al. v. CMH Homes Page 14

model of homes may have been sufficiently permanent that CMH could have classified them as
modular homes and sought approval under state building codes, rather than under the federal
HUD code. In light of the longstanding FTC and HUD interpretations regarding the MMWA,
when CMH made the decision to classify the home as a manufactured home, it likely did so with
an expectation that the MMWA would apply. To the extent that application of the MMWA
would operate to the benefit of CMH, the company has a reliance interest in that application, and
to the extent that it would operate to the company’s detriment, estoppel principles would counsel
against giving the company the benefit of exclusion.

For all of these reasons, I would hold that federal courts have jurisdiction under the
MMWA and may consider the merits of this case. I therefore respectfully dissent.