MANNING LEAVER LEGAL LANE The California CARS Act: Dealer Litigation Ahead WHAT DEALERS MAY SEE WHEN THE NEW RULES HIT THE COURTROOM BY DANIEL F. BERBERICH, ESQ. Partner, Manning, Leaver, Bruder & Berberich LLP On Oct. 1, the California Combating Auto Retail Scams (CARS) Act becomes operative, bringing significant changes to the way California dealers advertise, sell, finance and lease vehicles. By now, dealers have received considerable information about what the new law requires. Policies are being updated. Forms are changing. Sales and finance personnel are being trained. Dealerships are preparing for new requirements involving advertised prices, add-on products, customer communications, used-vehicle cancellation rights and record retention. But compliance is only part of the picture. Dealers should also consider the CARS Act from another perspective: How will these new requirements translate into future consumer litigation? What Will a CARS Act Case Look Like Two Years From Now? From a litigation perspective, new regulatory requirements should be viewed not only as compliance obligations, but also as potential sources of future claims. Today’s compliance requirement can become tomorrow’s allegation in a demand letter, lawsuit, document request or deposition. The CARS Act is unlikely to be an exception. Dealer advocacy successfully removed one of the most concerning provisions from the original legislation — an enhanced private right of action that would have made essentially every violation a deceptive practice under the Consumers Legal Remedies Act (CLRA). The enacted CARS Act contains no express private right of action. That is significant, but it does not mean that CARS Act issues will be excluded from litigation. Plaintiffs’ attorneys can be expected to pursue conduct allegedly violating the Act through existing statutes, including California’s Unfair Competition Law (UCL), False Advertising Law (FAL) and, where independently applicable, the CLRA. 19 California New Car Dealer Quarterly
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