Automobile Fraud: 9.4.1.4 Combining UDAP Claims with Other Claims
The fact that the UDAP statute does not contain all the best features of other claims should not prevent utilization of a UDAP claim, particularly in conjunction with other claims.
The fact that the UDAP statute does not contain all the best features of other claims should not prevent utilization of a UDAP claim, particularly in conjunction with other claims.
Claims under the federal Motor Vehicle Information and Cost Savings Act (MVICSA) (also known as the federal Odometer Act and the Truth in Mileage Act) will be available as parallel claims in many UDAP cases.
UDAP statutes are statutes of general applicability. Depending on the state, certain entities or practices may be outside the statute’s scope, but these rarely will have an impact on the automobile fraud cases analyzed in this treatise.
A state’s UDAP statute will almost always apply to motor vehicle sales for consumer purposes. The most significant limitation on UDAP applicability in this area is that some UDAP statutes do not apply to vehicles purchased for commercial purposes.328
Deception under a UDAP statute is a broad standard.
One of the most important uses of a UDAP statute is to attack the failure to disclose material facts. A car dealer will rarely volunteer that “this car has never been declared salvage,” or “this car was never used as a rental.” More often, the deception is the dealer’s silence instead of disclosing the car’s prior history.
Many state UDAP statutes, patterning themselves after the FTC Act, prohibit not only deceptive but also “unfair” acts or practices.365 This unfairness standard reaches various abusive business practices that are not deceptive. While deception is a broad standard, particularly when the failure to disclose is aggressively challenged as a deceptive practice, certain practices do not mislead, but only take advantage of consumers.
In about a third of the states, the UDAP statute prohibits unconscionable practices.369 Unconscionability as a UDAP concept appears to be an alternative to unfairness, but a few UDAP statutes proscribe both unconscionable and unfair practices.
One of the more important uses of a UDAP statute is to challenge practices violating other state or federal laws or regulations, when those other laws have inadequate private remedies or when there is some other reason that a direct claim under that other law is restricted. For example, consider if a state automobile dealer licensing statute or regulation requires disclosure of a car’s wreck history.
One of California’s two UDAP statutes prohibits not only unfair or deceptive conduct, but also unlawful business conduct.377 Thus the statute itself specifies that a violation of another statute is a per se California UDAP violation.378 Even though another statute provides its own enforcement mechanism, a violation of that statute is still a per se UDAP violation.379
There are many reasons why courts should adopt the position that a violation of other state law is a per se UDAP violation. If conduct that is not proscribed by any statute may be found unfair under a UDAP statute, conduct squarely within the prohibitions of a consumer protection statute surely meets the unfairness standard.397
Many UDAP statutes, or the regulations under them, include specific requirements for vehicle sales.
The undisclosed sale of a vehicle with a lemon buyback history is a UDAP violation.421 The consumer should be able to bring such a claim against both the selling dealer and the manufacturer.422 The lack of privity between the manufacturer and consumer is no defense for the manufacturer.423 A dealer’s ignorance of the manufacturer’s lemon laundering is also no defense for the dealer, because knowledge and intent are not elements of UDAP claims
It is deceptive to misrepresent or fail to disclose the nature of a car’s prior use, such as that it had been repossessed or was used as a demonstrator, executive car, taxicab, police car, driver’s education car, or rental vehicle.438 Misrepresenting the number of prior owners is a UDAP violation.439
It is deceptive to sell a used car as new or to fail to disclose that a car is used.450 Misrepresentation or nondisclosure is likely to violate a general UDAP prohibition against deception even if there is no statutory provision or regulation that specifically prohibits the practice.
Whether a vehicle is new or used can be a disputed question. Often a definition can be found in a motor vehicle statute, but courts may hold that this definition is not binding in a UDAP claim.452
As noted in the preceding subsection, some courts define a new car as one that has never been titled. Another definition is a car that has never been the subject of a retail sale. With either definition, the issuance of a title to a previous buyer will be critical evidence that the car is used.
The Federal Trade Commission’s Used Car Rule requires dealers to display a Buyers Guide as a window sticker in all used vehicles offered for sale.469 “Used vehicle” is defined as one driven more than the limited use necessary in moving or road testing the vehicle prior to delivery to a consumer.470 A dealer who misrepresents a used car as new is highly likely to violate this rule by failing to display the window sticker that might alert the buyer that the vehicle is used.
When a car dealer represents that it can sell a car, it represents that it has good title to the car.472 Selling a vehicle without disclosing a lien on it is a UDAP violation, even if the seller believes the lien to be invalid.473 It is a UDAP violation for even an innocent car dealer relying on a seemingly valid certificate of title to sell a car that later turns out to be stolen.474
The sale of a “gray market” vehicle—one made by a legitimate manufacturer, but for distribution in a market outside the United States478—is likely to involve UDAP violations.
In general, UDAP statutes place few restrictions on private actions.
Among the most attractive features of a UDAP claim are the available remedies.
The private remedies authorized by the federal Racketeer Influenced and Corrupt Organization provisions of the Organized Crime Control Act of 1970 (RICO)515 have assumed great importance in diverse fields of civil litigation. Although RICO was primarily devised as a weapon against organized crime, its broad provisions for criminal and civil liability were deliberately drawn to encompass types of business-related misconduct that are not peculiar to gangsters.
The RICO statute is somewhat confusing to deal with, partly because it does not prohibit racketeering activity directly. Rather, the core of a claim is the existence of an enterprise and the manner in which a defendant relates to that enterprise. RICO prohibits four types of relationships, each of which entails either a “pattern of racketeering activity” or the “collection of an unlawful debt.” The four prohibited practices spelled out in section 1962, subsections (a) through (d), are as follows: