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 became 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 have been updated. Forms have changed. Sales and finance personnel have been trained. Dealerships have been 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. “That Wasn’t the Price I Saw Online” One area likely to receive considerable attention is the CARS Act’s new “Total Price” requirement. When a dealer advertises a specific vehicle, the advertised price generally must be the Total Price at which the dealer will sell that vehicle, subject to the exclusions permitted by law. From a litigation standpoint, the allegation practically writes itself: “The vehicle was advertised online for $32,995. When I got to the dealership, they told me it was actually $34,990 because it already had $1,995 in dealer-installed window tint, wheel locks and door edge guards.” That scenario illustrates why Total Price is likely to receive considerable attention from plaintiffs’ attorneys. Preinstalled products are likely to be a particular area of risk. Dealers commonly install items such as wheel locks, window tint, upgraded wheels, bed liners, running boards, protection packages and other equipment before a vehicle is sold. The CARS Act does not prohibit dealers from selling vehicles with dealer-installed equipment. But if the equipment is installed before the vehicle is advertised or before the dealer’s first written price communication regarding the specific vehicle, its cost generally must be included in the Total Price. The issue ultimately comes down to whether the advertised figure is a price at which the dealership was actually willing to sell that particular vehicle. Suppose a dealership advertises a vehicle for $42,000 but has already installed a $1,995 product on every vehicle of that model, and dealership personnel routinely tell customers that the product cannot be 12
RkJQdWJsaXNoZXIy MTg3NDExNQ==