Legal News/Legislation

TrueCar, Calif. dealers settle litigation

SANTA MONICA and SACRAMENTO, Calif. - 

More than two-and-a-half years after the suit was filed, TrueCar and the California New Car Dealers Association have settled the litigation between the two parties.

In a statement released Thursday afternoon, TrueCar said as part of the resolution, its billing model in California will transition to a flat-fee subscription model — as opposed to the from the pay-per-sale model with a cap — by Jan. 1, 2019.

The new model will in the state also not have the “sales guarantee” as a retroactive adjustment mechanism, the company said.

Additionally, TrueCar has agreed to double the indemnity provided to its dealer partners in the state.

The suit was initially filed in May 2015

TrueCar has since gone through a well-documented overhaul of how it conducts business with dealers, including a Dealer Pledge launched in early 2016 by newly minted president and chief executive officer Chip Perry, who arrived in December 2016.  

Commenting on the CNCDA settlement in a news release, Perry said: “TrueCar is pleased that the litigation has been resolved to the parties’ mutual satisfaction, and we look forward to continuing to serve our dealer customers in the State of California.”

CNCDA president Brian Maas added: “This litigation afforded us the opportunity to thoroughly examine TrueCar’s user experience and business practices.  The agreement reached with TrueCar, together with the other adjustments to its business model made by TrueCar after CNCDA initiated this litigation, satisfactorily resolve our previously expressed concerns regarding the existing TrueCar business model, which is currently a pay-per-sale model with a cap.

“We also believe that through the doubling of the indemnity TrueCar offers to participating California dealers, we have procured another valuable benefit for our members through this litigation,” Maas added. “We are pleased that we are now able to put this matter behind us.” 


OEMs have chance for piece of $850 million Takata airbag restitution fund

BOSTON - 

Franchised dealerships have seen scores of customers arrive at their service departments to have defective Takata airbags replaced. Now, it’s the automakers’ turn to be compensated for the matter.

The special master in the criminal case involving Takata announced that he launched the $850 million restitution fund for OEMs that purchased airbags with PSAN inflators from Takata and its subsidiaries. 

The special master — defined as an official appointed by a judge who ensures court orders are followed — stated that he is sending notice to more than 50 manufacturers around the world that purchased the Takata airbags that are subject to widespread recall programs, and that may be eligible for compensation from the OEM Restitution Fund set up as part of Takata’s plea agreement in February.

Appointed by the United States District Court for the Eastern District of Michigan as special master is Eric Green, a Boston law professor and mediator.

According to the special master's notice sent to the manufacturers, Takata pled guilty on Feb. 27 to one count of wire fraud and the court entered the restitution order requiring Takata to, among other things, pay restitution in the amount of $481,848,850 to the OEMs who were defrauded in connection with their purchase of airbags with PSAN Inflators and additional restitution in the amount of $368,151,150 to all OEMs who purchased airbags with PSAN Inflators from Takata for a total amount of $850 million in restitution to OEMs.

On July 31, the court appointed Green as special master to oversee the OEM Restitution Fund. His responsibilities include developing a formula or formulas, subject to court approval, for distributing funds to eligible claimants, making determinations regarding allowed claims, and making a recommendation to the court regarding allocation of funds from the OEM Restitution Fund.

Officials explained that a significant majority of Takata’s OEM customers — which collectively purchased approximately 90 percent of the PSAN inflators sold by Takata as of Dec. 31, 2016 — agreed upon a proposed allocation and presented it to the special master for consideration.

Following a formal presentation on the proposal for allocation of the OEM Restitution Fund, several discussions with the consenting OEMs about the proposal, and an independent review by the special master of the proposal, the special master provisionally determined that the proposed allocation provides for an equitable distribution of the OEM Restitution Fund.

However, to ensure that all eligible OEMs have a chance to be heard, an opportunity is being provided for them to object to the proposed allocation or comment in writing to the special master prior to final determination by the special master and submission to the court for final approval.

Green is also in charge of a separate $125 million Individual Restitution fund designed for persons who suffer personal injury or wrongful death as the result of a Takata airbag inflator defect. Green stated that the proposed allocation of the Individual Restitution fund will be announced at a later date.

Under the proposed allocation, the restitution monies directed to the OEMs will be combined into a single global fund. All OEMs that purchased PSAN inflators, regardless of jurisdiction of sale, will be eligible to participate in the combined fund without the need for determining whether a particular OEM was defrauded by Takata.

Each OEM’s allocation will be determined by the percentage of all PSAN inflators sold by Takata globally that was purchased by that OEM as of Dec. 31, 2016. The court noted the special master has independently analyzed the verified third-party Takata PSAN inflator sales data utilized to determine the percentage for each OEM and determined it reliable.

The proposed allocation governing the distribution of the OEM Restitution Fund is set forth in the direct notice that was mailed electronically or otherwise to all identified OEMs that are eligible to participate in the OEM Restitution Fund. A copy of the direct notice and the proposed allocation schedule can be found and accessed on the special master's website, .

Officials indicated any remaining funds attributable to checks which are not cashed or to wire transfers that cannot be completed will be redistributed by the special master pro rata to all participating OEMs.

To receive an allocation from the OEM Restitution Fund, each eligible OEM will be required to provide a release in favor of the special master and his professionals, advisors and agents.

If an eligible OEM disagrees with the proposed allocation, it can comment on the plan or object. Officials said any comments and objections must be in writing and received by the special master on or before Dec. 20.

Objections can be emailed to [email protected] If a manufacturer does not submit a timely objection, officials insisted it will be deemed by the special master to have accepted and consented to the proposed allocation.

Following his review of any objections, Green anticipates that he will provide the final proposed allocation for the OEM Restitution Fund to the court for approval in January.

For any questions about the proposed allocation, visit , email [email protected], or call (800) 574-7035.


NADA alerts dealers about floor-plan pitfall in current Senate tax reform bill

TYSONS, Va. - 

The National Automobile Dealers Association wanted to alert principals and store owners who might be impacted by any turkey-consumption slumber about a crucial part of the U.S. Senate’s tax reform measure that currently includes a significant change regarding deductibility of floor plan interest.

As currently written, NADA explained the Senate’s tax bill would limit the deductibility of business interest — including floor plan interest — to 30 percent of adjusted taxable income. As interest rates increase, the association stressed that this change would result in dealers paying higher taxes even when a dealership does not show a profit.

“This is a tax increase for your business and could be especially devastating to cash flow, particularly to many of our smaller members, during an economic downturn,” NADA said.

“It’s imperative that we as a community of auto dealers and dealership employees take collective action to educate lawmakers regarding a major threat to dealerships that is included in the current version of the Senate tax bill,” NADA continued.

While NADA acknowledged the Senate tax reform bill is still being drafted, the legislation could be voted on as early as the last week of November.

“Senate floor action is critical to preserving the full deductibility of floor plan loans since there may not be opportunities to change the bill after the Senate vote,” NADA said.

“NADA urges dealers to their Republican Senator to ask them to add the House bill language that preserves full floor plan deductibility,” the association went on to say.

. Dealers also can view a list of target lawmakers here and a .

For more information or to provide Senate back, Patrick Calpin with NADA Legislative Affairs at (202) 547-5500.


Former NADA Pres. Brady joins Kerrigan Advisors

IRVINE, Calif. - 

Kerrigan Advisors announced Tuesday it has appointed former National Automobile Dealers Association president Phil Brady as senior adviser to provide the firm counsel on generational transitions and corporate planning.

Brady brings Kerrigan Advisors and its clients over 30 years of experience and extensive relationships based on his automotive and legislative background, the firm said.

Brady served as president of NADA from 2001 to 2012, and in 2015, retired from his most recent role as senior vice president for government affairs at Phillips 66.

“Phil brings with him the experience of industry leadership during some of the toughest times our industry has ever seen,” Kerrigan Advisors founder and managing director Erin Kerrigan said in a news release.

“In leading NADA through 2012, he navigated auto retail through collapsing sales, a brutal financial market and OEM bankruptcies. It’s this sort of depth of industry understanding and perspective that Kerrigan clients will really benefit from as they consider their business’ future in today’s consolidating auto retail market, whether that means passing to the next generation, gearing up for growth or considering a sale,” she continued.

Brady's legislative experience includes working in the White House as deputy counsel to the President during the Reagan Administration and serving as assistant to the President, staff secretary and general counsel to the Department of Transportation from 1991 to 1993 under President George H.W. Bush.

“It’s a privilege and a pleasure to be associated with Kerrigan Advisors, the well-recognized consummate professionals in representing dealers as they evaluate strategic options for their businesses,” Brady said. “I very much look forward to re-engaging with my many friends and colleagues in the auto retail industry.”

Prior to taking on his roles in government in D.C., Brady practiced law in California.

He is a graduate of the University of Notre Dame and Loyola University New Orleans College of Law.

In addition to his new advisory role, Brady currently serves as an adjunct professor at Catholic University of America’s Columbus School of Law.


Contact At Once! aquires new patent for mobile messaging

ATLANTA - 

Contact At Once! announced Monday that the United States Patent and Trademark Office recently issued it a patent for a system designed to analyze messages and initiate communication sessions for clients.

The new patent was developed to enhance the service that Contact At Once! customers are able to provide consumers who wish to communicate with businesses via chat and mobile messaging sessions, according to the company.

"Contact At Once! has continually invested in technological innovations to allow in-market shoppers and businesses to message at scale through a variety of media,” Contact At Once! vice president of product and strategy Marc Hayes said in a news release.

“This latest patent is another example of our commitment to helping our brands seamlessly connect with consumers in innovative ways that are most convenient for shoppers," he said.

Additionally, the company said the newly acquired patent expands on another recent patent by Contact At Once! that features a system and method for publishing online advertisements and search results.


NADA & NIADA object again to bill aimed to stop retail of recalled units

CARY, N.C. - 

Seven Democratic lawmakers are trying again to push legislation that would prohibit the retailing of vehicles with an unfulfilled recall; a plan prompting the two largest dealership associations to reiterate their objections and explain the potential unintended consequences.

Amid all the hubbub over healthcare and the revolving door at the White House, late last week a proposal dubbed the Used Car Safety Recall Repair Act surfaced on Capitol Hill as lawmakers leveraged reports over another potential fatality involving faulty Takata airbags. While both the National Automobile Dealers Association and the National Independent Automotive Dealers Association want to retail safe vehicles, the groups fear this measure would hamstring dealers and impact owners significantly.

“NIADA shares the goal of 100 percent recall completion rates and supports public policies designed to achieve that goal.  However, overbroad legislation prohibiting dealers from selling any used motor vehicle with any open recall does not move us toward that goal,” NIADA senior vice president of legal and government affairs Shaun Petersen wrote in a message to AuSM.

“This legislation treats all recalls the same — whether safety related or not — and does nothing to manufacture the parts necessary to repair recalled vehicles or entice owners to take a recalled vehicle to a franchise dealership for repair,” Petersen continued. “But most important, it harms consumers by diminishing the trade-in value of their recalled vehicles by an average of $1,210 — and often upward of $5,000 — and would likely force dealerships to not take those vehicles in trade at all.

“Requiring dealers to ground vehicles for any recall does not justify that economic loss, particularly when the National Highway Traffic Safety Administration admits not every vehicle with an open recall needs to be grounded immediately,” he went on to say. “NIADA stands ready and willing to work with members of Congress to find common-sense solutions to improve recall completion rates.  However, this legislation — which was rejected numerous times by the previous Congress — is not the answer.”

Led by Sen. Richard Blumenthal of Connecticut and Sen. Edward Markey of Massachusetts along with Rep. Jan Schakowsky of Illinois, supporters of the Used Car Safety Recall Repair Act fear any owner of vehicle under recall will suffer the same tragic fate as the dozen individuals fatally wounded by faulty Takata airbags.

“This commonsense bill will protect used car buyers from driving a ticking time bomb off the lot and onto our roads,” Blumenthal said.

Schakowsky added, “It’s already illegal to sell a new car or offer for rent a car under recall. Our bill will give used car buyers the simple assurance that known defects have been fixed before you drive the car off the lot.”

NADA spokesman Jared Allen confirmed many of the points Petersen raised, including how much trade-in values can suffer.

“When recalled vehicles awaiting repair parts — including vehicles that the engineering experts at the NHTSA and the automakers have determined are acceptable for consumers to drive — can't be sold, the market instantly devalues those vehicles, resulting in a massive trade-in tax of, on average, $1,210 per vehicle, according to J.D. Power,” Allen said in a message to AuSM.

“We’re not in favor of anything that would create a trade-in tax because it’s unfair to ask consumers to pay for a manufacturer’s mistake,” Allen went on to say. “Additionally, imposing a $1,210 trade-in tax could lead to fewer, not more, recalled vehicles getting repaired, and we don’t believe a reduction in the recall completion rate is a good policy outcome for consumers or anyone else.”

The legislation introduced in the House is also co-sponsored by Rep. Frank Pallone Jr. of New Jersey, Rep. Bobby Rush of Illinois, Rep. G.K. Butterfield of North Carolina and Rep. Doris Matsui of California.


Donlen offers solution to help fleets comply with new federal rule

BANNOCKBURN, Ill. - 

Donlen recently announced that it has partnered with J. J. Keller to offer an electronic logging device (ELD) solution for fleets that will ensure they are fully compliant with the Federal Motor Carrier Safety Administration's (FMCSA) ELD rule.

Most motor carriers and drivers are required to use ELDs to record their hours of service by Dec. 18.

This partnership allows Donlen to offer customers a compliant ELD solution that is both simple and flexible for fleets, the company said.

“Donlen partnered with J. J. Keller because they're one of the top names in the industry for compliance,” said Donlen director of licensing services Brad Kacsh.

“Together we’re integrating hours of service data from their electronic logging device (ELD) into Donlen’s DriverPoint Telematics technology. This provides enhanced visibility and real-time access to HOS logs to ensure consistent compliance with FMCSA regulations,” Kacsh said. 

The integrated data collected from J. J. Keller ELDs into DriverPoint Telematics provides enhanced transparency and accuracy for hours of service logs, according to Donlen.

J. J. Keller ELDs are compatible with all vehicle classes (1-8) and can be installed in less than 10 minutes.

Additionally, the solution is backed by customer support services and compatible with Android iPhone and iPad devices.

For additional information regarding the FMCSA ELD regulations and Donlen’s ELD solution, visit donlen.com/blog/electronic-logging-device-regulations


AIADA cheers lawmakers for halting border adjustment tax

ALEXANDRIA, Va. - 

While the Congressional clash over healthcare is generating plenty of headlines, the American International Automobile Dealers Association applauded this week’s actions by the so-called “Big Six” — a group of lawmakers and administration officials working together to establish a road map for tax reform — who have officially abandoned a potential border adjustment tax (BAT).

House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady, Senate Finance Committee Chairman Orrin Hatch, Treasury Secretary Steven Mnuchin and White House National Economic Council Director Gary Cohn jointly released a statement of principles reaffirming their commitment to passing substantive tax reform for all Americans while finally rejecting the border adjustment tax (BAT) proposal that would have added a 20 percent tax on all goods and services imported into the United States.

“The framework released today by Congress and the Trump administration places the tax reform train squarely back on its tracks,” AIADA president Cody Lusk said. “The border adjustment tax would have driven up costs on everyday goods and put Americans out of work.

“Now that it’s off the table, and the business community is no longer divided by this issue, we can get back to work on supporting this important legislation,” Lusk continued.

AIADA, whose members employ 577,000 Americans and accounted for 59 percent of all U.S. retail vehicle sales last year, insisted that the association would have been uniquely impact by a BAT. Because no vehicles are made with 100 percent American-made parts, the BAT would have added an average of $2,000 to the cost of all new vehicles sold in the United States, regardless of their origin.

The association emphasized the decision by the White House and Congress to listen to the concerns of consumer and business groups — including AIADA — and scrap the BAT allows dealers to throw their support behind a tax reform plan that “promotes economic growth, rewards entrepreneurship, and creates a level playing field for all Americans.”

A 2017 study by the Center for Automotive Research (CAR) estimates that U.S. light vehicle sales would immediately fall by 5.6 percent following implementation of a border adjustment tax, resulting in a $34.6 billion overall cost to U.S. consumers.

For more information on how a border adjustment tax would have impacted dealers, and how they have spent much of this year battling it, visit .


Podcast: Steve Levine of Ignite Consulting Partners

CARY, N.C. - 

The newest episode features a visit with one of the industry’s experts on compliance — Steve Levine — who is chief legal and compliance officer at Ignite Consulting Partners. 

Nick and Steve discuss how the regulatory world has intensified since the arrival of the Consumer Financial Protection Bureau.

Plus, they offer suggestions so dealerships easily can set a compliance plan in motion that can meet both state and federal mandates without completely eroding the store’s finances.

Download and subscribe to the AuSM Podcast on  or on . 

You can also listen to the latest episode in the window below.

All episodes can be found on our  or at ausm.info/ar-podcast.

Also, if you would be so kind, please complete .
 
 


Recall Masters latest integration addresses new recall legislation

ALISO VIEJO, Calif. - 

Recall Masters has a new partnership to integrate its real-time vehicle recall lookup solution into Record360’s vehicle condition reporting app. And this collaboration aims to help dealers and rental agencies avoid claims disputes when putting drivers in vehicles during recalls.

The enhanced transparency and real-time recall updates are brought by the integration, following new legislation concerning vehicle safety recalls passed just last summer.

Lawmakers addressed rental car agencies need to fix any and all open safety defects before renting out vehicles to customers.

The legislation established a fine of $5,000 if a consumer is put into a rental or loaner vehicle with an outstanding recall, Recall Masters explained in a news release announcing the partnership.

“Countless damage disputes impact relationships, customer satisfaction, and cause negative reviews,” said Recall Masters president Chris Miller. “Vehicle condition and claims management processes is dependent on paper or low-fidelity digital reporting and Record360 fills the gap with a modern solution.”

Dealerships and car rental agencies can automate their asset management by digitizing vehicle conditions reviews via Record360’s condition reporting software.

The software is designed to help prevent customers being put into a rental or loaner vehicle with an existing recall, as well as end customers’ ability to claim they did not cause damage to a loaner or rental.

“Our integration with Record360 ensures that the user is informed of any open recall in real-time while the initial inspection is done. This helps build trusting relationships between automotive dealers or car rental agencies and their customers,” added Miller.


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