SUMMER 2024 OFFICIAL PUBLICATION OF THE NEW CAR DEALERS ASSOCIATION SAN DIEGO COUNTY Getting To Know Incoming NCDA Chairman John Segal
Business Transactions • Buy-Sell Agreements • DMV, BAR, and other governmental approvals • Lender flooring and capital loan agreements • Entity formation and structure • Shareholder Agreements • Manufacturer approvals and relations • NMV non-profit association representation Estate Planning • Succession planning for businesses • Trust Agreements including lifetime benefit trusts • Gift and Estate Tax planning Tax • Property Tax planning, audits, and appeals • Federal estate and gift tax controversy audits • EDD Audits BUSINESS LAW | LITIGATION | ESTATE PLANNING | REAL ESTATE | TAX | EMPLOYMENT PRACTICES FERRUZZO & FERRUZZO, LLP | A Limited Liability Partnership, including Professional Corporations 3737 Birch Street, Suite 400, Newport Beach, California 92660 | PH: (949) 608-6900 | ferruzzo.com Business Litigation • Consumer Legal Remedies Act lawsuits • Sales and Service Agreements • Disputes before the CA New Motor Vehicle Board • Consumer claims regarding the sale of automobiles • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisition and dispositions • Lease agreements • Lender Opinion Letters Employment Practices • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims • Arbitration Agreements • Employer Handbooks and Employer Compliance Procedures Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers over four decades ago. Over the course of that time, one of the central goals of the firm has been to remain rooted in our client relationships. With the strength of over 25 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. We have practice groups in each area of the law that service the needs of you and your dealership.
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©2024 New Car Dealers Association® San Diego County (NCDA) | The newsLINK Group LLC. All rights reserved. San Diego Dealer is published four times each year by The newsLINK Group LLC for the NCDA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the NCDA, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. San Diego Dealer is a collective work, and as such, some articles are submitted by authors who are independent of the NCDA. While San Diego Dealer encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. CHAIRMAN JOHN SEGAL........................... DISTRICT 3 VICE CHAIRMAN ERIC TRACY........................... DISTRICT 1 SECRETARY/TREASURER SCOTT KIEFNER..................... DISTRICT 6 PAST CHAIRMAN CHRIS GEORGE...................... DISTRICT 4 BOARD MEMBERS JENIFER BALL......................... DISTRICT 6 ANTHONY BENFATTI............ DISTRICT 1 MATT CRANDALL.................. DISTRICT 2 PAUL DYKE............................. DISTRICT 4 BANU GREWAL...................... DISTRICT 3 GREG KAMINSKY................... DISTRICT 4 JASON MOSSY........................ DISTRICT 5 MANNY SEDANO................... DISTRICT 5 JOHNNY SIEPKER................... DISTRICT 2 NCDA STAFF SCOTT WEBB PRESIDENT DIANA SILVA ACCOUNTING AND ADMINISTRATION MANAGER TYLER GRAY MARKETING & OPERATIONS MANAGER CLAUDIA OLVERA MEETING AND FACILITIES COORDINATOR ROBERT HEINTZ CALIFORNIA SALES TRAINING ACADEMY INSTRUCTOR Contents 10065 Mesa Ridge Court San Diego, CA 92121 Tel: (858) 550-0080 Fax: (858) 550-9537 ncda.com 12 22 Publication 12 | 2023-2024 Issue 3 | Summer 6 CHAIRMAN’S LETTER Better Off When We Work Together By John Segal, Chairman, New Car Dealers Association 7 Tyler Gray Joins NCDA as Marketing & Operations Manager 7 Will Cumming Named To Automotive News’ “40 Under 40” 8 Getting To Know Incoming NCDA Chairman John Segal 12 NCDA Golf Tournament and Annual Meeting/Luncheon 16 Introducing New NCDA Board Members 18 Increase EV Sales with PlugStar Training and Certification 20 Plaintiff Attorney’s Fees in Lemon Law Lawsuits Restricted by Section 998 Offer By John P. Swenson, Shareholder and Janae L. Hill, Associate, Scali Rasmussen 22 Heat Illness Prevention By Sam Celly, BChE MChE, JD CSP, Celly Services Inc. 25 ElectrifIQ National Certification Identify Yourself as an EV Expert and Local Resource 26 Welcome New Associate Members! KPA HR Maze 28 San Diego Auto Outlook Second Quarter 2024 4 SAN DIEGO DEALER
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Chairman’s Letter Better Off When We Work Together By John Segal, Chairman, New Car Dealers Association It is an absolute honor to serve as the chairman for the New Car Dealers Association. I also want to express my gratitude to our board of directors for the time they spend every month representing our dealers. Each year in the automotive industry we are confronted with new challenges and adversity that we must face and endure. I have learned that we are much better off when we work together, which is why the NCDA was originally created. As an association, we have many issues that are top-of-list for the coming year. This includes technician vulnerabilities such as shortages and training. We also hold training for dealers at the NCDA Building on a variety of topics that include state and federal laws, as well as local policies that affect our dealerships and customers. We welcomed some new challenges this summer which affected many dealerships over the past few months, such as the cyberattack on CDK that halted business as well as the CrowdStrike code glitch. These were “uncharted territories” that very few of us had experienced in years past. We anticipate more of these crimes to continue over the coming years, and we need to be as ready and prepared as we can for them. The NCDA is excited about the 2025 San Diego Auto Show, and it is vital that our brands and dealers support it. It is the best opportunity of the year to influence new car purchase decisions. We are really needing attendance from every general manager and dealer. Last year, I personally drove a few of my peers to the show who had been skeptical in years past that the show was worth the money. One peer said he had actually voted against it in his manufacture meeting, although his brand still attended the show. But after he saw all the people climbing in and out of his brand’s vehicles, he has changed his vote this year. Every year, without fail, I walk around the show, and I overhear the public complaining that they had a certain manufacturer that they wanted to see that wasn’t there, which will certainly influence their buying decisions. In closing, I look forward to bringing new ideas to the association for the coming year, and I welcome dialogue with my fellow dealers about their ideas. Our newly appointed board members, along with our returning members, bring a tremendous amount of experience to the group. We learn from each other every meeting and we work as a team to tackle any issues that come at the dealers. We are a dedicated group and I’m proud to be surrounded by such talented individuals. Sincerely, John Segal Chairman, New Car Dealers Association • Labor Relations • Employee handbooks • Employment Law Counseling and Litigation • HR Policies and procedures • Independent contractor issues • OSHA Compliance and defense • Purchasing or selling a dealership • Staffing and contingent workers • Workers’ Compensation • Wage and hour law A driving force in labor and employment law for more than 70 years. Fisher Phillips brings valuable legal counsel to NCDA members. Our labor and employment law firm offers auto dealerships the following services: fisherphillips.com 4747 Executive Drive | Suite 1000 | San Diego, CA 92121 6 SAN DIEGO DEALER
NCDA.COM 7 The New Car Dealers Association San Diego County (NCDA) is pleased to welcome Tyler Gray as our new Marketing and Operations Manager. A native of San Diego and graduate of San Diego State University, Gray brings many years of digital marketing experience, as well as four years of small-business ownership and automotive retail experience working for San Diego area dealers. Gray returns to the automotive industry after working in high‑volume retail sales for the past several years. “Tyler is a great addition to our team with his extensive knowledge of dealership operations and event production, combined with his widespread experience in various facets of digital marketing,” said Scott Webb, NCDA president. “His successful sales experience and insight into younger market demographics will help expand opportunities for our partners at the NCDA and SDIAS.” Gray is responsible for sponsorship and exhibitor relationships for a variety of product and service categories for the upcoming 2025 San Diego Auto Show scheduled to be held Dec. 28, 2024, to Jan. 1, 2025, at the San Diego Convention Center. In addition, Gray will be involved in a number of dealer-facing initiatives for the NCDA, including involvement in our dealer communications, the California Sales Training Academy and associate member engagement efforts. Some of you may have met Tyler at the recent NCDA Golf Tournament & Annual Meeting/Luncheon, which was his first day on the job. Gray is a devoted motorsports enthusiast, and regularly organizes performance driving events for the Southern California car community, where he also participates in grass-roots racing series throughout the year. He also brings an extensive personal network in the motorsports/manufacturer spaces. Tyler can be reached by email at tyler@ncda.com or by phone at (858) 550-0080, ext. 13. Tyler Gray Joins NCDA as Marketing & Operations Manager Congratulations to Cumming Chevrolet’s Will Cumming for being selected by Automotive News as one of their 40 Under 40 class for 2024. The 40 Under 40 class is “a group of talented and dedicated leaders blazing paths in automotive retail.” Will Cumming Named To Automotive News’ “40 Under 40” https://www.autonews.com/ awards/2024-40-under-40will-cumming Read more about Will and his recognition by scanning the QR code.
John Dominic Segal’s life is nothing short of interesting; it’s almost like he was destined to be in the auto industry from the day he was born. His parents first met at a dealership. His dad, John Walter Segal, was the sales manager, and his mom, Teri, was the customer who ended up purchasing a car. The next day, Teri came into the dealership to take delivery of her new car, and John Walter decided to come in on his day off just to ask her out. About seven months later, the two were married. The couple welcomed their first son, John Dominic, one year later. He grew up watching his dad rise through the ranks of the industry. “I still remember going to the dealership with my dad; while he worked, I played on the showroom floor,” he recalled. “I learned a lot from him over the years.” At 13 years old, John would often help around the dealership as a detailer, a lot attendant and a fence painter when needed. His pay was his dad buying him lunch and spending quality time over a meal. While attending Bellarmine College Prep, a Jesuit high school in San Jose, he continued to work for his father at the dealership until he left for college at San Diego State University. While college was out for summer break, John sold cars for his dad, a general manager at the time. “I would sell cars during the summers so that I could return to college with some spending money,” he said. He graduated from San Diego State University with a bachelor’s degree in communications. Getting To Know Incoming NCDA Chairman John Segal 8 SAN DIEGO DEALER
Around that time, his father became a partner in a dealership, and the two planned on working together. Unfortunately, his father was involved in an accident and passed away a few months later. The decision was made to sell the partnership back, so his mother did not have to work. John went to work with a different auto group. The lessons he learned growing up and his father’s good example served him well. Today, John is the general manager of Kearny Mesa Ford and Kearny Mesa Kia in San Diego. He is also just beginning his term as the 2024-2025 chairman of the New Care Dealers Association San Diego County (NCDA). We recently had a chance to sit down and talk with John about his thoughts on life, his chairmanship and the industry. The following are excerpts from our conversation. Do you have a favorite quote? “That which does not kill us makes us stronger” is my favorite quote. Ironically, it fits our industry well because we are very resilient. Sometimes situations knock us off course — like COVID or the recent cyberattack — but we as dealers adapt, learn, grow and become stronger from these experiences. At this point, the industry is very prepared for another pandemic. But for many, including my dealership group, this is the first time being involved in a cyberattack. There is nothing I can do to get us out of this mess. The only thing I can do is to control the controllable. As a leader, I can keep a positive mental attitude with the team, show up and work through this alongside them and with them instead of telling them what to do. In short, lead by example. What are the two or three most significant issues facing the auto industry? Cyberattacks are definitely at the top of my list based on our most recent experience. High interest rates for both customers purchasing vehicles and dealership flooring are also a problem. Additionally, coming out of COVID manufacturers aren’t entirely building cars at full speed yet, so managing inventory can be challenging at times. Another big issue is EV pricing, servicing and facility improvements, which have been very costly. Many dealers have put up EV chargers, and it is sometimes a struggle to find someone to fix them when they are down. There are also several unanswered questions: Are we going to hold the power grid, and are we going to have as much power as we need based on what we know about the fast charge and the slower charge? Also, will we have the needed infrastructure on site for the facility to keep up with the demand as we progress through EV sales? We need to work closely with our OEMs to address this. Why is the franchise system still the best way to sell cars? The franchise system creates competition amongst dealers, allowing the customers to get the best deal possible. It also leaves customers with the choice of who they want to do business with. Another piece of why the franchise system is good for the community is the dealers’ relationships with local businesses and charities. Our industry, on the NCDA.COM 9
whole, does a lot of goodwill and charity work that we don’t talk about because we are not looking for accolades. We do it out of the kindness of our hearts and because we enjoy being a part of the communities we work and live in. How will the industry change in the next 3-5 years? I think we may see a clearer direction from both local and state officials on EV growth as a percentage of our overall sales — we need to continue to work with our OEMs and the government to come up with a realistic timetable. I also see the EV range getting longer, alleviating the anxiety that many consumers have. Lastly, cars are becoming very technologically advanced; they’re making leaps and bounds every year and show no signs of stopping. How long have you been an NCDA member, and why did you get involved in the association? Our store has been an NCDA member for decades, but about four years ago, right after COVID started, a peer within my auto group told me that serving on the NCDA board was a great way to get to know local government officials and other local dealers and collaborate. When I joined, we were holding regular Zoom calls due to the pandemic, and I was pleasantly surprised at how everyone was working together, discussing how they were handling certain situations. I learned a lot, especially when it came to the political/ government aspect of trying to have our voices heard as dealers. NCDA has a fantastic board that does an amazing job of bringing issues to members’ attention. It was a big eye-opener for me. What do you see as the benefit of being an NCDA member? The opportunity to collaborate and network amongst peers is invaluable, as well as the association’s efforts to have constant and clear communication with members. NCDA does a great job of being innovative in an industry that’s constantly changing and morphing. We can’t fix every problem by ourselves. When you have a group of people that have been through hard events — like cyberattacks and COVID — talking about what others are doing to find solutions brings a lot of great ideas to the table on how to handle issues. When we come together as a whole dealer body, we are strong, and NCDA is always there to support us. What are your goals as chairman? I want to continue lines of open communication with government officials to make sure our voice is heard here in San Diego, especially as we navigate through volatile market conditions and a changing industry. It is a top priority to make sure the auto show is a success. We want our auto show to be as robust as possible to provide our customers and people in the market the best possible opportunity to see, touch, feel and get the whole experience of the vehicles we sell, not just see it on a commercial. The data verifying the considerable influence that our show has on consumer purchase decisions is incredible, and revenue from the show ensures that NCDA can maintain our valuable member benefits for many years to come. What help do you need from members to accomplish those goals? I hope that board members continue to have open minds and are willing to change and adapt with new, fresh ideas. The board is made up of a great, eclectic group of people from all different backgrounds. Everyone adds value in a different way. I encourage members to support the auto show in addition to the many events NCDA puts on, like job fairs. Members should not hesitate to pick up the phone to either call me or Scott Webb, our president, with ideas or suggestions. We are always happy to hear from our dealers. Have you had any mentors? What did you learn from them? My father was amazing at connecting with his employees and making them feel like family, regardless of how big the dealership was. I try to follow his example. I walk the dealership minimally two to three times a day to make sure I say “Hi” to the employees. Without fail, every single walk I take, I get something new from it. I might ask, “Hey, what’s this doing here?” or an employee asks, “Do you have a minute?” and expresses their anxiety about an issue they might be having. I want to make sure they know that they are valued and supported. When you mentor others, what are three pieces of advice you would share? 1. Lead by example. Don’t tell others what to do; show them what to do. 2. The only easy way is the hard way. Shortcuts don’t exist. 3. When it’s time to make a decision, always do the right thing for your employees and your customers. Bottom line, if you don’t know the answer, go with your gut. What career accomplishment are you proudest of? Professionally, watching those I’ve mentored achieve career milestones is my greatest accomplishment. Seeing an employee buy their first car or home or have a child is really neat. I take pride in knowing I was a part of something that helped them. Personally, I had a goal of being a GM partner at age 40. I was able to achieve that at age 32. That was a big goal and I could not have achieved it without help from so many great teammates and peers. Tell us about your family and hobbies. My wife, Marcella, and I have two children: a 12-year-old daughter and an 8-year-old son. When I’m not working, I enjoy boating with my family, watching my kids play sports and golfing. Any last thoughts? Working hard is important, but who you help and mentor along the way matters most because no one can do it alone. Be open to help. If you’re trying to shoulder everything yourself, you’re not going to get to where you need to be as easily or as quickly as you might think. 10 SAN DIEGO DEALER
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Thank you to all of our sponsors and participants for making this such a wonderful annual event! We look forward to seeing you again next year on Wednesday, May 14 at Maderas Golf Club. 12 SAN DIEGO DEALER
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Introducing New NCDA Board Members Anthony Benfatti General Manager Hoehn Jaguar Land Rover Carlsbad Anthony was born and raised in North County, San Diego, California. He has worked in the automotive industry for 20 years with 11 years at Hoehn Jaguar Land Rover. He graduated from the California Sales Training Academy in 2013 and the NADA Dealer Academy in 2018. Anthony is married with two children. He spends his off time traveling, off-roading, diving, lobstering, fishing and clay shooting. Greg Kaminsky Dealer Principal Toyota of El Cajon Born and raised in Southern California, Greg has been working in the automobile industry since the age of 12 when he and his brother Gary washed cars at Keyes Toyota in Los Angeles. After earning his bachelor’s degree from the University of Southern California, Greg followed in his father’s footsteps, beginning a career at Toyota of El Cajon where he has held various positions over nearly 30 years. Today, Greg and Gary together own and operate Toyota of El Cajon, as well as other dealerships in the region, including Honda of El Cajon Superstore and Puente Hills Toyota. Additionally, Greg is a longtime champion of the automobile industry overall, having served as president of the San Diego New Car Dealers Association and on the board of the California New Car Dealers Association. Currently, he serves on the board of the American International Automobile Dealers Association. Greg is married with four children and enjoys traveling and spending time with his family. Manny Sedano Dealer Principal Sedano Automotive Group Manny grew up in San Diego County, specifically Tecate and Lakeside, California. After graduating from El Capitan High School in 1991, he enlisted in the Marine Corps and served four years. He had his first job as a salesman in 1995, at a Chevrolet store in Los Angeles. Manny stayed there, serving various roles until late 2006 to start his own used car dealership in Bakersfield, California. After becoming a Chevrolet dealer in 2011, Manny returned to San Diego in 2016 and, since 2017, lives in Point Loma with his wife and three children. Manny holds a bachelor’s degree in business from the University of the Pacific and a master’s in business from the University of San Diego. John Siepker General Manager Pedder Chrysler Dodge Ram Jeep of Poway John was born and raised in Southern California and attended NADA Academy, where he graduated in March of 2016. With his unwavering passion and tireless dedication, he’s propelled himself into the automotive industry. From humble beginnings to leading the charge, John’s journey is a testament to the power of perseverance and a relentless drive to excel. With over two decades of experience under his belt, John has honed his skills, mastered the intricacies of the trade and now proudly helms Pedder Chrysler Dodge Ram Jeep of Poway as general manager. But John’s success is not just about his professional accomplishments — it’s about the way he inspires his team, motivating them to reach new heights and deliver exceptional service to his valued customers. His heart for serving others is truly remarkable, and it’s this unwavering commitment that has earned him the respect and admiration of all who work alongside him. When John isn’t navigating the fast lane of business, you’ll find him exploring the world with his wife of 18 years and three children, creating cherished memories that fuel his spirit and recharge his passion. 16 SAN DIEGO DEALER
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California dealers and retailers are selling electric vehicles (EVs) at record-numbers, reaching 25% of the new car market. However, consumers still need support and education surrounding the EV ecosystem. In addition, dealers are experts at selling vehicles, but there are a lot of extra questions customers have when it comes to buying EVs versus a gas vehicle, which can sometimes increase the sales cycle of EVs. The PlugStar EV dealer certification, training and ongoing support program works to provide critical resources and education on EVs and connect EV-educated consumers with EV-educated dealers to reduce the EV sales cycle and to help dealers sell more EVs! NCDA is excited to announce the PlugStar program designed specifically for San Diego County dealers and offered for free to NCDA members for a limited time.* Through their PlugStar program, Plug In America works with car dealerships, automakers and retailers nationwide to train and support their salespeople on electric vehicle topics, including the vehicle and battery technology benefits, savings and total cost of ownership, EV sales best practices, local and government incentives, and charging at-home and on-the-go (e.g., how to work with electricians to install level 2 home chargers, how/where to find public chargers, etc). PlugStar trained dealer salespeople sell four times (4×) more EVs than their untrained counterparts, and are 60% more Increase EV Sales with PlugStar Training and Certification PlugStar trained sales staff sell 4X more EVs than their untrained counterparts PlugStar certified dealers sell ~20% more BEVs than non-PlugStar dealers PlugStar dealers are 2X more likely to get 5-star customer ratings than non-PlugStar dealers PlugStar dealers interviewed report that 100% of dealers recommend the PlugStar Program to other dealers PlugStar trained sales staff are ~60% more EV confident on EV topics after participating in PlugStar EV sales training PlugStar online tools are utilized as 20% of PlugStar customers use PlugStar tools prior to EV purchase Source: Plug In America EV dealer incentives data Source: Cross-Sell 3rd party EV sales data. BEV – Pure EV. Source: PlugStar and non-PlugStar customer surveys Source: PlugStar dealer management interviews Source: Pre and post PlugStar EV training surveys Source: PlugStar customer release form question. PlugStar online tools include SMUD.PlugStar.com and PlugStar.com 18 SAN DIEGO DEALER
EV-confident after participating in the program. PlugStar certified dealers sell 20% more battery electric vehicles than non-PlugStar dealers, and 100% of those who registered for the program recommend it. Sign up for the PlugStar certification program to increase EV sales! Your salespeople will sell electric cars with confidence and offer an exceptional shopping experience for your customers. This training program is offered online. Your dealership will need at least two trained salespeople to earn Bronze certification. As part of their certification benefits, PlugStar dealers will: 1. Get access to Plug In America’s EV Support Program through email and phone support lines for ongoing help for you and your customers; 2. Receive PlugStar monthly EV Dealer Newsletter with helpful tips, updates and news about the EV market; 3. Get highlights and recognition on a. First dealer listings on Plug In America’s EV shopping site, PlugStar.com. b. Plug In America’s social media outlets, including LinkedIn, Facebook and X. c. Plug In America Newsletter, and; d. PlugStar EV Dealer Newsletter. 4. Receive marketing collateral to highlight your PlugStar EV Certification; 5. Get access to Plug In America’s EV webinars; 6. Sell EVs with more confidence, and; 7. Deliver a better customer experience. Register for the free Bronze PlugStar training & certification program by emailing dealers@pluginamerica.org. Your dealership will get access to free online training for two dealership sales staff. Include your dealership name and location, and mention the NCDA membership in the body of the email. *The first two salespeople who go through the online PlugStar training program will get the training for free. After that, your dealership can get more salespeople certified, with a 50% discount. The full price for each seat of the online training is $195. This offer has been developed specifically for San Diego County NCDA members. Bronze PlugStar certification is valued at $1,000 and requires that at least two dealership salespeople complete the PlugStar online training. Sign up for this limited-time offer by Oct.18! EV Support Program by Plug in America NCDA.COM 19
As most car dealers are aware, offers made pursuant to California Civil Procedure (CCP) Section 998 can be a useful tool to reign in the cost of settling consumer litigation. Section 998 is a cost-shifting statute designed “to encourage the settlement of litigation without trial, by punishing the party who fails to accept a reasonable settlement offer from its opponent.” Westamerica Bank v. MBG Indus. Inc. (2007) 158 CA4th 109, 129 (internal quotes omitted). Among other features, Section 998 provides “the costs allowed under Sections 1031 and 1032 shall be withheld or augmented”: If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer. In addition, ... the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the defendant. CCP § 998, subds. (a), (c)(1) Recently, the Court of Appeal published an opinion in the case of Ayers v. FCA US LLC interpreting Section 998, which supports limiting the plaintiff’s attorney fee awards in lemon law cases even if dismissal is entered pursuant to the parties’ mutual agreement. In Ayers v. FCA US LLC, the Plaintiff purchased a Jeep Grand Cherokee that the plaintiff alleged had multiple defects. This led to the plaintiff filing a lawsuit, which included causes of action against the manufacturer for violations of the Song-Beverly Consumer Warranty Act. Shortly after the complaint was filed, the manufacturer served an offer pursuant to CCP § 998. The plaintiff did not accept the offer. The manufacturer made two additional offers pursuant to CCP § 998, which were also rejected by the plaintiff. The manufacturer made a third and final offer to buy back the vehicle for $143,000 and pay reasonable costs and attorney’s fees pursuant to Civil Code§ 1794(d). While the Ayers litigation was pending in the trial court, there was a change in the law that reduced plaintiffs’ damages. Specifically, in Niedermeier v. FCA US LLC, the Court of Appeal held that Song‑Beverly’s restitution remedy “does not include amounts a plaintiff has already recovered by trading in the vehicle at issue” and excluded such amounts from the calculation of Song-Beverly penalties. In this case, the Plaintiff traded in his vehicle for $13,000, making his maximum potential recovery reduced by $39,000. Shortly after Niedermeier was decided, Plaintiff made his own Section 998 offer for $125,000 plus costs, expenses and attorney fees pursuant to Civil Code § 1794(d) as agreed by the parties or determined by the trial court in lieu of agreement. In exchange, it provided for the dismissal of the lawsuit with prejudice. The manufacturer accepted the offer. The plaintiff filed a motion for an order to determine fees, expenses and costs after the parties failed to agree on the amounts. Plaintiff requested $220,852.50 in attorney fees and $440,512.75 in costs, for a total of $261,365.25. The manufacturer argued its third Section 998 offer precluded the plaintiff from recovering $74,527.50 in fees, which was incurred after the date of the offer. The trial court rejected this argument on two grounds: 1) Section 998’s limitations on expense and cost recovery do not apply when the case is resolved by a pretrial settlement; 2) the intervening change in law that reduced the Plaintiff Attorney’s Fees in Lemon Law Lawsuits Restricted by Section 998 Offer By John P. Swenson, Shareholder and Janae L. Hill, Associate Scali Rasmussen 20 SAN DIEGO DEALER
maximum amount plaintiff could recover at trial exempted him from the usual consequences of Section 998. The Court of Appeal did not agree with the finding and reversed the trial court’s decision. The Court of Appeal in Ayer found the attorney fee and costs awards in favor of buyers under Civil Code § 1794(b) are not exempt from CCP § 998. The Court of Appeal also found that the limitations of Section 998 still apply when the litigation is resolved by settlement, with no verdict from a trial. Importantly, the Court of Appeal relied on Madrigal v. Hyundai Motor America, which is currently pending before the California Supreme Court. The Ayer court found the change in law during litigation did not exempt the plaintiff from the consequences of denying an offer pursuant to CCP § 998. The court reasoned that rejection of a reasonable settlement offer bears a risk. Accordingly, the judgment of the trial court was reversed and remanded with instructions to enter a new judgment excluding any costs incurred by the plaintiff after the manufacturer’s third Section 998 offer. The recent court opinion in Ayer favors defendants in a Song-Beverly lawsuit highlights the importance of comprehensive legal defense strategies and adherence to industry standards. The Court of Appeal ruling not only reaffirms the rights of manufacturers but also highlights the nuanced complexities of consumer protection laws. As legal precedents continue to evolve, it is crucial for businesses to stay informed and engage proactively with legal counsel to navigate potential legal challenges effectively. If your business is facing Song-Beverly claims or seeks proactive legal guidance, we invite you to contact one of the many qualified legal professionals at Scali Rasmussen to explore our firm’s expertise in this area and discover how we can help safeguard your interests. “We have a fantastic relationship with the LSL team. They keep our interests top of mind and maintain a positive reputation in the industry.” —Craig Whetter, President | David Wilson Automotive Group (relationship since 1983) Donald Slater, CPA, Partner Assurance & Advisory donald.slater@lslcpas.com Adam Odom, CPA, Partner Assurance & Advisory adam.odom@lslcpas.com David Myers, MST, CPA, Partner Tax & Advisory dave.myers@lslcpas.com LSL | CPAs & Advisors | Brea, Laguna Hills, Sacramento & Santa Ana, CA | The Woodlands, TX | lslcpas.com/automotive | 714.672.0022 NCDA.COM 21
Cal/OSHA requires training for each employee, including managers, in heat illness prevention before starting any work that has the risk of exposure to heat. Managers, in their supervisory role, must be able to understand the causes, prevention, and symptoms of, and remedies for heat stress. They are responsible for ensuring each employee is offered and completes the employee heat illness prevention training, keeping training records, reviewing the draft Heat Illness Prevention Program (HIPP) provided on our Celly Services Inc. E-Learn site, and making site-specific changes as necessary. The HIPP must be available to all employees. Guidance for managers on Heat Illness Prevention is provided below. For complete details, please refer to your HIPP by scanning the QR code. https://www.dir.ca.gov/title8/3395.html Background Both Cal/OSHA and Federal OSHA require that employers take affirmative and preventative actions to reduce heat stress. The law, enacted in California several years ago and updated in 2015, requires employers to train all employees — supervisory and non‑supervisory — to prevent heat stress. This memo provides you with guidance on the statute and steps you may take to comply with the law and protect employee health. Cal/OSHA requires you to show your HIPP and proof of employee training on heat stress when they inspect your facility. Workers who are exposed to extreme heat or work in hot environments may be at risk of heat stress. Exposure to extreme heat can result in occupational illness and injuries. Heat stress can result in heat stroke, heat exhaustion, heat cramps or heat rashes. Heat can also increase the risk of injuries in workers as it may result in sweaty palms, fogged-up glasses and dizziness. Burns may also occur because of contact with hot surfaces. Such stress can affect employee judgment. Current law applies to “outdoor places of employment.” Employees working outdoors, such as salespersons and porters in the lot, technicians and parts delivery drivers are at a high risk of heat stress. Shops with marginal ventilation, metal roofs and/or hot engines idling may increase the ambient temperatures, making heat stress an issue. All managers must be familiar with their Heat Illness Prevention Program in its entirety. Monitoring Weather Managers should check the extended weather forecast in advance using weather forecasting tools such as The OSHA-NIOSH Heat Safety Tool provided by the Centers for Disease Control’s National Institute for Occupational Safety and Health. A work schedule must be planned based on weather conditions. For example, heavy-duty jobs should be scheduled for early (cooler) parts of the day. To access the OSHA-NIOSH Heat Safety Tool, scan the QR code. https://www.cdc.gov/niosh/topics/heatstress/heatapp.html Swamp Coolers Portable evaporative coolers should be installed in the shop area during hot summer days. The size and number of coolers will be determined by the size and airflow in the shop area. The coolers are an electrical appliance and should be used with caution. The operating manual for the cooler must be reviewed by the shop staff. Test your coolers and A/C systems at your facility. It is better to address defective or compromised cooling systems now rather than wait for extreme weather. Fans in the shop area provide limited relief and as such swamp coolers may become necessary to cool workplaces. During periods of high humidity, fans may provide better relief than swamp coolers. Start a Conversation With Your Employees The conversation should be about the possible impact of hot ambient temperatures, working with hot machinery and the various means of alleviating the effects of heat. Training should include topics as follows: • Closely Observe: All employees shall be closely observed by a supervisor or designee during a heat wave. For purposes of this section only, OSHA regulations state “heat wave” is any day in which the predicted high temperature for the day will be at least 80 degrees Fahrenheit and at least 10 degrees Fahrenheit higher than the average high daily temperature in the preceding five days. Heat Illness Prevention By Sam Celly, BChE MChE, JD CSP, Celly Services Inc. 22 SAN DIEGO DEALER
• Acclimatize: An employee who has been newly assigned to a high heat area shall be closely observed by a supervisor or designee for the first 14 days of the employee’s employment. • Drink Water: Remind employees to drink water and stay hydrated. You must provide accessible, cool drinking water. • Assess and Use Body Cooling Gear: Managers should evaluate personal cooling gear such as neck gaiters and skull caps for employees. Cooling gear is available for $5 to $10 each. Training in proper usage of cooling gear is relatively easy. Current available gear specifications indicate that the gear can cool the body up to 30 degrees, activates in less than 60 seconds with just water and stays cool for up to two hours. The cooling cloth technology is chemical-free, machine washable and reusable. Body cooling gear must not be loose, such that it could get stuck in moving machinery. • Pay Special Attention if You Have High Blood Pressure And/or Diabetes: Heat impacts people with diabetes and/or high blood pressure in a severe manner. Employees with those ailments should discuss with their MD regarding extra precautions to be taken in hot summer months and/or working in with hot equipment and machinery. • Get the OSHA App for Your Cell Phone: Employees can download the “OSHA-NIOSH Heat Safety Tool” app to their phones and get the local Heat Index, Hourly Heat Index, Symptoms of Heat Stroke, First Aid for Heat Stroke and other safety tips. To download the app, scan the QR code. https://www.cdc.gov/niosh/topics/heatstress/heatapp.html • Use the Buddy System: Heat exhaustion can hinder an employee’s ability to rationally think and even create confusion. Each employee will be assigned a “buddy” to be on the lookout for signs and symptoms of heat illness and report to the supervisor immediately. Also, ensure that emergency procedures are initiated when someone displays possible signs or symptoms of heat illness as listed in the paragraph on the next page titled “Response to Heat Illness.” Note: Employee Heat Illness Prevention Training material has also been provided to management for review and circulation to all employees. Document all employee training. Employee Training Employee training must include: 1. Environmental and personal risk factors for heat illness. 2. Different types of heat illness and the common signs and symptoms of heat illness. 3. Employer’s procedures for complying with OSHA HIP requirements. 4. Importance of immediately reporting to the employer, directly or through the employee’s supervisor symptoms of heat illness in themselves, or in coworkers. 5. Use of a buddy system for monitoring heat stress and preventing heat illness, including seeking timely medical attention. 6. Importance of frequent consumption of small quantities of water. 7. Importance of acclimatization. 8. Access to a cool, shaded break room where employees can rest during their break or cooldown periods. 9. Use of the OSHA-NIOSH Heat Safety Tool to understand and prevent heat illness. 10. Employer’s procedures for emergency responses to symptoms of possible heat illness and how medical services will be provided should they become necessary. 11. Procedures for contacting emergency medical services, and if necessary, for transporting employees to a point where they can be reached by an emergency medical service provider. 12. How to provide clear and precise directions to the work site. Be Prepared for Emergencies — Post Signs on Employee Notice Board Post signs for your employees on the notice board providing the following information: • Steps to follow if a work has signs or symptoms of heat‑related illness. • Who to call for medical help and how to give clear directions to the worksite if calling 911. • How to provide first aid until the ambulance arrives. How to Implement Appropriate Acclimatization • Employees should ease into work. Nearly 3 out of 4 fatalities from heat illness happen during the first week of work. • Gradually increase time working in hot conditions over 7 to 14 days. • A new employee’s schedule should be no more than 20% of the usual duration of work in the heat on Day 1 and no more than a 20% increase each day. • For workers with recent experience, their schedules should be no more than 50% of the usual duration of work in heat on Day 1, 60% on Day 2, 80% on Day 3, and 100% on Day 4. • Closely supervise new employees for the first 14 days or until fully acclimatized. • Non-physically fit workers require more time to fully acclimatize. • Acclimatization can be maintained for a few days of non‑heat exposure. • Taking breaks in air conditioning will not affect acclimatization. Rest and Cool Down • Permit rest and water breaks when a worker feels heat discomfort. • Modify work/rest periods to give the body a chance to get rid of excess heat. • Assign new and unacclimatized workers lighter work and longer, more frequent rest periods. • Shorten work periods and increase rest periods: ○ As temperature and humidity increases. ○ When there is no air movement. ○ If protective clothing or equipment is worn (i.e. paint suit). ○ For heavier work. NCDA.COM 23
Response to Heat Illness Management and all employees must understand the signs and symptoms of, and first aid and emergency responses to heat illness. OSHA provides this guidance for employers knowing that an MD is generally not available on site to diagnose, treat or respond to heat‑related illness. The following guidance is a quick tool from the OSHA‑NIOSH Heat Safety Tool app to use in the event of heat‑related illness. Guidance from an MD should be followed as required. The app also provides information on heat cramps and heat rashes. Heat Stroke Signs & Symptoms Response • Confusion, slurred speech • Loss of consciousness • Red, hot, dry skin or profuse sweating • Seizures • THIS IS A MEDICAL EMERGENCY: Call 911. • Stay with the worker until help arrives. • Move the worker to a shady, cool area. • Remove outer clothing. • Cool quickly with a cold water or ice bath if possible; wet the skin, place cold wet towels on the skin, or soak clothing in cool water. • Fan air around the worker. • Place cold wet towels or ice on the worker’s head, neck, armpits and groin. Heat Exhaustion Signs & Symptoms Response • Cool, moist skin and heavy sweating • Headache • Nausea or vomiting, dizziness, light‑headedness, weakness • Thirst • Irritability • Elevated body temperature • Decreased urine output • Take the worker to a clinic or emergency room for medical evaluation and treatment. • If medical care is unavailable, call 911. • Stay with the worker until help arrives. • Remove the worker from the hot area and give them liquids to drink. • Remove unnecessary clothing, including shoes and socks. • Cool the worker with cold compresses or have them wash their head, face and neck with cold water. • Encourage frequent sips of water or other cool beverages to drink. • Do not let the worker return to work that day. Is Your Shop Indoors or Outdoors? The HIP law applies to outdoor places of employment; OSHA’s interpretation of outdoor places may include your covered or enclosed shop areas. See the interpretation from OSHA below. What Is Meant by “Outdoor Places of Employment?” An outdoor place of employment is best thought of as one that is not an indoor workplace. A workplace with a roof and enclosed sides is generally considered an indoor workplace. For the purposes of this standard, the distinguishing quality of indoor workplaces is that they reduce the risk factors that commonly lead to heat illness. For information about environmental risk factors for heat illness, scan the QR code. https://www.dir.ca.gov/dosh/heatIllnessQA.html For example, a building that provides sufficient ventilation and cooling, either by natural or mechanical means, and blocks exposure to direct sunlight is considered an indoor workplace. Sheds, packing sheds and partial or temporary structures such as tents, lean-tos and structures with one or more open sides can be either indoor or outdoor workplaces, depending on the circumstances. In many cases, these structures may be hotter than the environment outside because of heating by the sun and conditions inside like limited air circulation or lack of insulation. A structure in this category may be considered an outdoor workplace if it does not significantly reduce the net effect of the environmental risk factors that exist immediately outside of the structure. DISCLAIMER: The contents of this newsletter are for informational purposes only and are not to be considered as legal advice. Employers must consult their lawyer for legal matters and EPA/OSHA consultants for matters related to Environmental, Health & Safety. The article was authored by Sam Celly of Celly Services Inc. who has been helping automobile dealers in Arizona, California, Hawaii, Idaho, Nevada, New Mexico, New York, Texas and Virginia comply with EPA and OSHA regulations for over 35 years. Sam is a Certified Safety Professional (No. 16515) certified by the National Board of Certified Safety Professionals. Sam received his BE (1984) and MS (1986) in Chemical Engineering, followed by a J.D. from Southwestern University School of Law (1997). Sam is a member of the American Chemical Society (No. 31176063), American Industrial Hygiene Association (No. 124715), and National Association of Dealer Counsel (NADC). Sam also serves on the Board of Orange County American Industrial Hygiene Association and on the CA Industrial Hygiene Council (CIHC). Our newsletters can be accessed at www.epaoshablog.com. Your comments/questions are always welcome. Please send them to sam@cellyservices.com. 24 SAN DIEGO DEALER
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