Skip to main content

Search

Automobile Fraud: 10.5.2 Items to Seek in Formal Discovery

Once the case is filed, it is important to begin discovery early. One experienced automobile fraud attorney recommends starting discovery with a document request that includes a demand for the entire dealer file, and then following up with a deposition of the salesperson, with instructions that the salesperson is to bring the original dealer file to the deposition. The consumer’s attorney’s staff then copies the original file as one of the first items of business during the deposition.

Automobile Fraud: 10.5.3 Pattern Evidence

A critically important area to explore through formal discovery is other transactions involving similar allegations.271 There are several theories supporting the admissibility of such evidence,272 and many courts have ordered it produced in discovery.273

Automobile Fraud: 10.5.4 Making the Most of Available Discovery Techniques

Some discovery techniques are better than others for obtaining certain types of information. Interrogatories and requests for production of documents are effective ways to identify documents and witnesses. With car dealers, it is important to ferret out all the documents, including service department records, financing documents, facsimiles and other communication records, records and notes from the finance and insurance manager, and the used car manager’s notes and records.

Automobile Fraud: 10.5.5 Preparing for Discovery Battles

The consumer’s attorney must be prepared for discovery battles in automobile fraud cases, especially when seeking evidence that will pinpoint the fraud or establish a pattern of misconduct. Experienced consumer attorneys often view these expected discovery battles as critical stages of automobile fraud cases, because success in these battles (particularly seeking “pattern” evidence) may change a case from a winnable one to an overwhelmingly powerful one.

Automobile Fraud: 10.5.6 Deposing the Dealer

A sample outline for deposing the dealer is available online as companion material to this treatise. One useful question to ask the dealer during deposition, and at trial, is whether the dealer has changed any of the dealership’s practices since the plaintiff’s experience came to the dealer’s attention. If the dealer answers no, it shows intransigence, while an affirmative answer is further evidence that the dealer acted wrongfully toward the plaintiff.

Automobile Fraud: 10.5.7 The Defendant’s Deposition of the Consumer Plaintiff

In preparation for the deposition, start with the basics with the client. These may seem like common sense steps but it is unlikely that the client has ever attended a deposition before and providing as much detail as possible can help the client feel more relaxed and less anxious about the experience. Explain what a deposition is and the purpose of this informal proceeding. Describe the location of the deposition and make sure the client has transportation to the location to arrive ahead of the designated time.

Automobile Fraud: 10.5.8.1 Right to Record the Deposition

Consumer attorneys should carefully consider an audiovisual recording of any deposition of the consumer plaintiff, particularly if the consumer is elderly or unsophisticated. Federal Rule of Civil Procedure 30(b)(3)(A) states that the deposition may be recorded by audio, audiovisual, or stenographic means, and the party taking the deposition shall bear the cost of the recording. Rule 30(b)(3)(B) states that, with prior notice, any party may designate another method to record the deponent’s testimony in addition to that specified by the person taking the deposition.

Automobile Fraud: 10.5.8.2 Advantages and Disadvantages of Video Recording the Deposition

The video recorded deposition may become necessary to show at the trial if the consumer becomes incapacitated or dies before the trial. Moreover, particularly if the consumer is elderly or vulnerable, video recording the deposition can have a profound effect on the other side’s attorney. The attorney may become less aggressive and badgering, and may even become flustered, because the attorney knows that any aggressiveness and its impact on the consumer will be visible to the viewer.

Automobile Fraud: 10.5.9 Dealing with Missing Documents

Sometimes discovery reveals that documents are missing. For example, a dealer or manufacturer may claim to have purged records about the vehicle. Following up with specific interrogatories about where, why, and by whom each document was destroyed sometimes results in the defendant finding the documents. If not, it can produce information that will be useful upon cross-examination.286

Automobile Fraud: 10.6.1 Prior Collection Action

The creditor sometimes files and wins a collection action against the consumer before the consumer seeks legal advice about automobile fraud. Whether res judicata bars an affirmative suit by the consumer in this situation depends on the rules of the forum state.

Automobile Fraud: 10.6.2 Prior Fraud Suit or Criminal Prosecution

Sometimes a consumer sues a dealer for misrepresenting a car’s condition, but discovers odometer tampering or some fraud in the title history at some later date after the lawsuit is concluded. Can the consumer can then bring a new action alleging the newly discovered fraud? This problem can usually be avoided by, as a matter of course in any car case, getting a title history and having an expert review the car’s condition, including the accuracy of the odometer reading.

Automobile Fraud: 10.7.1 In General

It is relatively rare for cases involving rollbacks, concealed wreck damage, lemon resales, or yo-yo sales to be brought as class actions. Many of these cases involve individual fact patterns. On the other hand, some parties do systematically violate the law for all or many of the cars that pass through their hands, and the nature of this violation follows a pattern. In such a situation, a class action may be appropriate.

Situations that may involve the same violation for a large enough number of vehicles to support a class action include:

Automobile Fraud: 10.7.2 Shaping the Class Action

As automobile fraud cases generally involve significant actual damages, it will usually be necessary to bifurcate the case, with a determination of liability on a classwide basis, followed by individual proceedings to assess damages. For example, the class portion of an odometer act case will focus on whether there was a pattern of violations under the act and whether the transferor had the requisite intent to defraud.

Automobile Fraud: 10.7.3 Claims to Assert in Automobile Fraud Class Actions

Too many claims may make a class action less appealing and raise concerns about manageability. Claims under a number of different statutes, whose elements overlap only partially, can also make it necessary to have subclasses. On the other hand, it is important to include at least one claim that allows an award of attorney fees.

Automobile Fraud: 10.7.5 Class Pleadings

The pleadings in an automobile fraud class action will vary greatly, depending on the particular practice that is challenged. Full sets of pleadings, motions, memoranda, discovery, and settlement papers in three sample odometer fraud class actions are available online as companion material to this treatise. The online material also includes sample individual complaints for a variety of other types of automobile fraud that can be adapted to form the basis for class action complaints.327

Automobile Fraud: 10.7.6 Preventing Defendants from Settling Against Individual, Unrepresented Class Members

There is a particular risk in an automobile fraud class action that the defendant will contact potential class members to settle their claims. This is because these class actions are likely to involve fairly clear-cut violations, largely provable by documentary evidence, that will result in significant damages for each class member, and the class size will likely be in the low hundreds rather than in the thousands.

Automobile Fraud: 10.8.1.1 Overview of Admissibility of Other Acts Evidence

In an automobile fraud case, it is unlikely that the individual consumer’s car is the first whose history the defendants concealed, or the first whose odometer the defendants rolled back. If other similar acts by the defendants can be discovered, proving them gives the trier of fact a sense of the “stench” of the defendants’ practices. Evidence of other acts is likely to be highly persuasive to the jury.

Automobile Fraud: 10.8.1.2 To Show Intent or Motive

The rule that evidence of other bad acts is admissible to show intent or motive should suffice to admit the evidence in most if not all automobile fraud cases.343 Intent is a material issue in such cases, because it is a required element of fraud claims and claims under the federal odometer statute,344 and is likely to be relevant to a RICO claim.

Automobile Fraud: 10.8.1.4 To Show Knowledge

Evidence of other acts is admissible to show the defendants’ knowledge, which may be relevant in a number of situations.351 Knowledge of the fraudulent activities of a dealership’s salespersons is relevant, for example, to establish the liability of an entity that receives the benefits of the fraud.352

Automobile Fraud: 10.8.1.5 To Show Absence of Mistake or Accident

Defendants in automobile fraud cases frequently raise the “dumb dealer” defense—the claim that the inaccurate odometer disclosure or undisclosed wreck damage was merely a mistake. Evidence of other bad acts is admissible to prove absence of mistake or accident.357 Similarly, it should be admissible to rebut any bona fide error defense under a consumer protection statute.

Automobile Fraud: 10.8.1.6 To Show Habit or Routine Practice

Evidence of prior acts can also be part of proof of an individual’s habit or an organization’s routine practice.358 Such evidence can be substantive proof that the individual or organization acted in conformity with the habit or routine practice on a particular occasion. For example, evidence that the defendant customarily signed blank transfer and mileage papers supports a finding that the defendant did the same thing in the particular plaintiff’s transaction.359

Automobile Fraud: 10.8.1.7 To Support Punitive Damages Claims

If the consumer seeks punitive damages, evidence of other bad acts is clearly admissible to show intent or malice. In BMW of North America, Inc. v. Gore,360 the Supreme Court noted: “Certainly evidence that a defendant has repeatedly engaged in prohibited conduct while knowing or suspecting that it was unlawful would provide relevant support for an argument that strong medicine is required to cure the defendant’s disrespect for the law. . . .