## Facts

- Sandra Goodin purchased a new Hyundai vehicle from an authorized Hyundai dealer (not directly from the manufacturer, Hyundai Motor North America, Inc.).
- During the test drive and shortly after purchase, Goodin experienced recurring problems with the vehicle, including vibration/shimmy when braking.
- Goodin sought repairs through the selling dealer and another Hyundai dealership, but the problems persisted despite multiple service visits.
- Hyundai had issued written limited warranties covering certain components and repairs for specified time/mileage periods.
- Goodin sued Hyundai in Indiana state court under the Magnuson–Moss Warranty Act, asserting (among other theories) breach of the implied warranty of merchantability and seeking damages for economic loss.
- Hyundai defended primarily on the ground that Goodin could not maintain an implied-warranty claim against Hyundai because she bought the car from a dealer, not Hyundai, and therefore lacked “vertical privity” with the manufacturer.
- A jury found for Goodin on the implied-warranty theory and awarded damages; the verdict did not turn on any finding of privity between Goodin and Hyundai.
- On appeal, the Indiana Court of Appeals held that vertical privity was required for Goodin’s implied warranty of merchantability claim against Hyundai and concluded Goodin failed to prove it.
- The Indiana Supreme Court accepted transfer to resolve whether vertical privity is required in Indiana for a consumer’s implied-warranty claim for economic loss against a manufacturer when the purchase is through an intermediary.

## Issues

1. Whether Indiana law requires vertical privity between a consumer and a manufacturer as a prerequisite to the consumer’s claim against the manufacturer for breach of the implied warranty of merchantability seeking economic loss when the product was purchased from a dealer.

## Decision

- The Indiana Supreme Court held that Indiana law does not require vertical privity between a consumer and a manufacturer for a claim against the manufacturer for breach of the implied warranty of merchantability seeking economic loss.
- The court rejected the Court of Appeals’ privity requirement and allowed Goodin’s implied-warranty claim against Hyundai to proceed despite the lack of a direct buyer–seller relationship.
- In reaching that result, the court treated earlier language suggesting a privity requirement as nonbinding dicta and declined to follow it as controlling law.

## Legal Principles

- A consumer may sue a manufacturer for economic loss based on breach of the implied warranty of merchantability even if the consumer purchased the product from an intermediary in the distribution chain; vertical privity is not required.
- Magnuson–Moss permits implied-warranty claims, but the existence and scope of an implied warranty generally depends on applicable state warranty law; in Indiana, implied merchantability claims are not barred solely by lack of direct contractual privity with the manufacturer.
- Prior judicial statements about privity that were unnecessary to the outcome of an earlier case do not control later cases; courts may reconsider such dicta when it conflicts with the governing statutory scheme and current commercial practice.
- The implied warranty of merchantability addresses whether goods are fit for ordinary purposes; allowing an implied-warranty claim against a manufacturer in consumer-product transactions reflects the reality that manufacturers frequently stand behind products through warranties even when sales occur through dealers.

## Conclusion

*Hyundai Motor North America, Inc. v. Goodin* holds that Indiana does not impose a vertical-privity requirement on a consumer’s claim against a manufacturer for breach of the implied warranty of merchantability seeking economic loss, even when the consumer bought the product from a dealer rather than directly from the manufacturer; accordingly, Goodin was not barred from pursuing her implied-warranty claim against Hyundai on privity grounds.


Hyundai Motor North America, Inc. v. Goodin, 822 N.E.2d 947 (2005)