Thursday, October 25, 2007
Court Allows Consumer Class Action Against Car Dealer
By STEVEN M. ELLIS, Staff Writer
A class action suit against an automobile dealership alleging that it inflated sales prices by including previous installment contract deficiency balances without adequate informing customers may proceed, the Fourth District Court of Appeal ruled yesterday.
Div. One reversed the decision of Imperial Superior Court Judge Christopher W. Yeager, holding that Gary Lewis had made an adequate showing to certify the proposed class in his suit against Robinson Ford Sales, Inc.
The suit was originally brought by Robert Cornell, who alleged that the dealership misrepresented the actual purchase/finance prices of new vehicles and improperly calculating the prices by adding deficiency balances from traded-in vehicles to the sale price for new vehicles.
Cornell had claimed that the dealership set the inflated amounts forth in retail installment sales contracts without notifying customers in writing of the actual amount of the deficiency balance or the amount by which the sale price had been increased. The alleged purpose of this practice was to make the sales contracts more attractive to lenders, who would consider taking assignment of the contract, or to achieve a certain monthly payment for the customer.
After Cornell died in 2005, Lewis became his personal representative.
Lewis claimed that the dealership’s failure to disclose the actual prices in the sales contracts, absent the deficiency balances, violated California’s Automobile Sales Finance Act. He also claimed, as a result, that it also violated the Consumer Legal Remedies Act and the Unfair Competition Law.
Lewis brought a motion for certification of the proposed class, which he defined as all customers who purchased a vehicle from the dealership after Dec. 28, 2000 who had entered into a retail installment sales contract in which the cash price of the purchased vehicle was increased to cover part or all of a deficiency balance, or “over-allowance,” and who had not been notified by the dealership of the amount of the over-allowance.
Lewis argued that the proposed class was sufficiently ascertainable, had a well-defined community of interest, and held common questions of law and fact in common amongst its members.
However, the trial court agreed with the dealership that there was no ascertainable class, and denied Lewis’ motion.
On appeal, Justice Richard D. Huffman concluded that Lewis had made an adequate showing for certification of the proposed class.
Noting that Lewis’ theory was that the mandatory disclosures required by the Automobile Sales Finance Act regarding the purchase price of the subject vehicle were analogous to a strict liability provision, and that individualized proof of reliance or financial harm to the customer is therefore not required for liability, Huffman said that Lewis’ proposed class definition was workable in light of the common issues.
He also pointed out that Lewis’ allegations contained predominant common questions of law and fact, because the existence of any statutory violations could be determined by examining the face of some 450 records that the dealership had provided during discovery with respect to potentially subject transactions.
“[T]he facts that different customers arrived at different deals,” he wrote, “based on their trade-in or lease values compared to the purchased vehicle cost, can be accounted for in a class action context through the use of formulas or other means of implementing the underlying legal findings.”
As a result, Huffman said, Lewis had carried his burden of showing the required community of interest in the current class definition, such that the maintenance of a class action would be advantageous to both the judicial process and the litigants.
Huffman was joined in his opinion by Justice Patricia D. Benke and Justice Gilbert Nares.
The case is Lewis v. Robinson Ford Sales, Inc., 2007 S.O.S. 6336.
Copyright 2007, Metropolitan News Company