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Automobile Fraud: 6.9.2.3 Statutory Damages Awarded Against Each of Multiple Defendants

Each party violating the Act is liable for its own violations, and thus a plaintiff may recover statutory damages from each party who violated the Act.137 This result is consistent with the Act’s deterrent purposes: “The purpose of the statute is to punish odometer tamperers by imposing civil penalties upon them and to reward purchasers who discover such tampering and bring it to the attention of the federal courts.”138 The alternative, limiting a second defendant’s liability to the incremental

Automobile Fraud: 6.9.2.5 Multiple Statutory Damages Awards to One Plaintiff for One Defendant’s Multiple Violations

Courts are divided concerning whether a plaintiff may recover multiple statutory damages when the same defendant violates several different Act provisions.145 For example, the courts are divided as to whether a consumer can recover minimum statutory damages when a dealer tampered with an odometer and additional statutory damages when the same dealer also provided an inaccurate disclosure statement to the consumer.

Automobile Fraud: 6.9.3 Statutory Damages Awards Under State Statutes

State odometer statutes have their own remedial schemes, and the state statute’s statutory damages provision could be preferable to the Federal Act’s provision in some circumstances. Kansas’s statute authorizes the consumer to void the sale and also provides a maximum $2000 statutory penalty.150 A North Carolina court allowed treble damages under the state deceptive practices statute in addition to $1500 statutory damages under the state odometer act.151

Automobile Fraud: 6.9.4 Attorney Fees

The Federal Act specifies that: “The court shall award costs and a reasonable attorney’s fee to the person when a judgment is entered for that person.”154 This statutory language makes several points explicitly. The court, not a jury, awards the attorney fees and costs. The award of fees and costs is mandatory if a judgment is entered for the plaintiff.155 The plaintiff need not prevail on all counts or even most counts.

Automobile Fraud: 6.9.5 Costs

The Act states that a prevailing plaintiff “shall” be awarded costs,176 and thus costs should be reimbursed for filing fees, transcripts, and the like.177 The United States Supreme Court in West Virginia University Hospitals v.

Automobile Fraud: 6.9.6 Class Actions

The Federal Act does not place any restrictions on the use of class actions to seek relief under the Act. No cap is placed on the maximum recovery in a class action, so that a prevailing class should recover three times all actual damages for each class member.

Automobile Fraud: 6.10.1.1 Inspections, Impoundments, and Investigations

The Act empowers the Secretary of Transportation to obtain a warrant187 and, pursuant to that warrant, to designate agency employees to enter and inspect premises, impound motor vehicles or pieces of equipment for inspection, and inspect dealer or distributor records.188 The Secretary may require that dealers and distributors keep certain records demonstrating compliance with the Act and the Secretary may require production of such records as evidence of compliance.

Automobile Fraud: 6.10.1.2 Civil Penalties Sought by the United States Department of Transportation

A person who violates the Federal Act, its regulations, or an order issued under the statute may be liable to the federal government for a civil penalty not to exceed $10,000 for each separate violation.191 This amount is adjusted periodically for inflation and, effective January 14, 2021, the penalty is increased to $11,256.192 A separate violation occurs for each motor vehicle or odometer involved.

Automobile Fraud: 6.10.1.3 Federal Criminal Penalties

The Act imposes a felony penalty of up to $50,000, imprisonment for up to three years, or both, on any person197 who “knowingly and willfully” commits any act or causes to be done any act that violates any provision of the Act.198 While the violation must be knowing and willful (that is, an intentional violation of a known legal duty), no specific intent to defraud need be shown.199 While intent to defraud is required for recovery in a private dama

Automobile Fraud: 6.10.1.4 Injunctive Relief Sought by United States Attorney General

The United States Attorney General may bring a civil action to enjoin a violation of the Federal Act or its regulations.211 The United States can bring the action in the federal court in which the violation occurred or in any district where the defendant is found, resides, or does business. Process may be served in any other district where the defendant resides or is found. A subpoena for a witness in the action may be served in a judicial district.212

Automobile Fraud: 6.10.2 State Attorney General Enforcement of the Federal Act

The chief law enforcement officer of a state (that is, the state attorney general) is granted the power to bring a civil action whenever a violation of the Federal Act or its regulations occurs in that officer’s state.213 The action must be brought within two years of the claim accruing, and in either federal district court214 or a state court of competent jurisdiction.215 Not only will courts use the discovery rule to determine when the two years

Automobile Fraud: 8.1 Advantages and Disadvantages

A fraud, deceit, or similar tortious misrepresentation action has major advantages over a claim based on the federal odometer statute, or deceptive practices (UDAP), racketeering (RICO), breach of warranty, or state motor vehicle statutes. Critically, punitive damages are often available when fraud is proven.

Automobile Fraud: 8.3.1 Representation Must Have Been Misleading

To support a fraud claim, the representation (or failure to disclose) underlying the fraud action must have been false or in some other way have conveyed a false impression.23 Often this representation relates to some positive quality of the car, such as it “runs well” or “has never been wrecked.” It may be in the form of an odometer reading, or a fresh paint job that hides repairs of wreck damage. It may pertain to the car’s history.

Automobile Fraud: 8.3.2 Representation Must Have Been Material

The materiality of the alleged misrepresentation is not often a central dispute in automobile fraud cases. In most cases the alleged misrepresentation is obviously material, relating to the age,28 mileage,29 or condition30 of the car. Nevertheless, materiality must be alleged and proven.

Automobile Fraud: 8.3.3.1 General; What Is a Statement

For purposes of common law fraud and deceit actions, misrepresentations can be in the form of affirmative misstatements (oral or written), acts that conceal facts, or, in certain circumstances, nondisclosure of facts. It is common for one transaction to involve all three varieties of misrepresentations.

Automobile Fraud: 8.3.3.2 Fact Versus Opinion; Promissory Fraud

To prove fraud, the plaintiff must show that the seller misrepresented a statement of fact. It is often stated that a statement of opinion is not actionable.36 However, when a salesperson’s statement to a consumer could be interpreted as either fact or opinion, courts have tended to classify declarations about a car’s condition or quality as fact, in light of the relative knowledge and roles of the parties.

Automobile Fraud: 8.3.4 Fraud by Active Concealment

While a fraud action can be based on an affirmative statement of oral or written words, it can also be based on a seller’s active concealment of information about a car, when that concealment yields a misleading impression of the car’s condition.

Automobile Fraud: 8.3.5.1 General

Silence itself can convey a false impression of a car’s condition, even when the seller has not sought to hide by physical means any problem with the car. An unaware buyer may listen only to what is said, not to what is not said, and subsequently drive off unknowingly in a salvage car, a recycled lemon, or an unsafe vehicle.

Automobile Fraud: 8.3.5.3 Seller’s Superior Knowledge

It is a developing trend to hold that a seller’s superior knowledge about the nature of the goods sold can be the basis to find fraud from mere silence.86 For example, a seller who knows that a vehicle has a salvage history may be found liable for fraud for failing to disclose it.87

Automobile Fraud: 8.3.5.4 Statutory Duty to Disclose

Sometimes a statute imposes a duty to disclose upon a seller, the breach of which can give rise to a fraud action. For example, many new or used car damage disclosure statutes,97 state lemon laundering statutes,98 salvage vehicle laws,99 and title transfer regulations100 create disclosure requirements.