May 2009 - Colorado Automobile Dealers Association

Colorado Automobile Dealers Association
Volume 9, Issue 5
Nancy Ariano Column ..................... page 2
Federated Insurance Articles .......... page 3
Tim Jackson Column ....................... page 4
Bud Wells Board Room Dedication ... page 5
Under the Gold Dome ...................... page 6
May 2009
Litigation and Legal Trends ............ page 8
Regulatory & Legal News .............. page 10
Jeff Carlson, NADA News ............. page 12
Calendar of Events .......................... page 15
Virtual Webinars ............................... page 16
Chair’s Column
READY OR NOT, THE BATTLE OF THE
AUTO MANUFACTURERS IS ON
“In its assessment of the automakers situation, the Obama administration’s Auto
Task Force said that “pruning” of dealers by GM and Chrysler wasn’t going far
enough. The administration didn’t give specific targets, but GM Interim Chairman
Kent Kresa said the message was clear: “The government wants it to happen faster
than we had planned.”
-The Capital Times, Madison WI. www.madison.com
Nancy Ariano
CADA Chair
The crowds are roaring, the politico is seated. The gladiators are led into the arena,
dressed in short red or blue tunics and loin cloths, adorned with the logos of Chrysler
or GM. Those who have trained hard, who routinely built their muscle by pumping the
weights of debt, payroll, 401k accounts, health insurance, and local community sponsorships have perhaps prepared to be a worthy opponent. They’ve ducked and dodged recalls
and danced around factory shortages and furthered their agile skills by jumping the rope
held at one end by the factories and the other end by the consumer.
Some have been fed diets of fat—convinced that swallowing extra inventory or remodeling their facilities would provide strength and energy, giving them padding to protect their
vital organs. Now, thrown onto the center stage, (trying to remain as small a target as
possible) that extra weight proves to be a disadvantage, rendering the gladiator less agile.
Who will be first?
Who will try to
lead out with their
stronger leg and
try to prove to be
superior in every
way? Although both
opponents have
learned to relish
the fact that they
are still alive—that
theyʼve obviously
won many battles
in the past, who will
lose today?
2
Who will be first? Who will try to lead out with thier stronger leg and try to prove to be
superior in every way? Although both opponents have learned to relish the fact that they
are still alive—that they’ve obviously won many battles in the past, who will lose today?
In the past, the complexity of the armor and the costume was affected by the amount
of money put up to fund the game. But now each combatant has different disadvantages.
Some may be armed heavily with rationale but still have little protection. Some may be
shrouded in the armor of working capital and high CSI scores but still may be holding
only a small knife.
Which gladiator will be mortally wounded? Who will lay down his shield and raise his
left hand to plea for mercy? Who will get the thumbs up? Who will get the gladiator
rudis prize?
Colorado Automobile Dealers Association
May 2009
Informative Articles from Federated Insurance
CONTROLLING
INSURANCE COSTS –
What Can Businesses Do?
PROTECTING YOUR MOST
VALUABLE ASSET
Is my most valuable asset as well
protected as my other assets?
All things being equal, two businesses with virtually the
same operation may pay the same premium for property,
liability, and workers compensation insurance—until
one makes an insurance claim. That claim could result
in higher insurance premiums. These guidelines can
help you keep your insurance costs under control:
1. Find a trusted insurance advisor. Select an
insurance advisor who really understands your industry
and your business and takes the time to properly design
an insurance program.
2. Align yourself with an insurance company that
specializes in your industry. Insurance carriers may
enter into a market for short-term financial gain. What
happens if their venture falters and they pull out? Can
you easily find another carrier? At what cost? Insurance
companies with a history of commitment to your
industry and your association typically are in it for
the long haul. Loyalty to your industry does matter!
3. Get serious about safety! Implement appropriate
risk management policies and practices. Introduce an
effective safety program to help prevent losses. Look
for an insurance provider that makes safety and loss
prevention resources available and is able to help with
implementation.
4. Review claims. Review your claims at least
annually. Confirm accuracy and discuss any open
claims or reserves. Implement practices that help
prevent those claims from reoccurring.
5. Be prepared. Review coverages and services with
your insurance representative at least two to three
months before renewal to see if they still meet your
needs.
6. Don’t buy on price alone! While price is a component, other features—coverages, safety assistance,
claims services—can help contribute to significant
savings over time. Lower “front-end” premiums may
result in more “back-end” costs with claims that are
either not covered or have limitations.
Most of us would probably agree that our ability to
earn an income is one of our most important assets.
An income provides us with the means to purchase
basic necessities as well as the means to help fulfill our
dreams and build a foundation for future plans. As long
as you have the ability to earn an income, you are able
to accumulate assets and provide for your family. But
what would happen if you became disabled?
Most alternatives to replacing lost income are only
halfway measures.
• Can you rely only on Social Security?
Qualifying for Social Security benefits is very
difficult because the disability must prevent you
from doing any kind of work—not just your
usual job. The definition of disability for Social
Security states that one must be completely
disabled with no hope of recovery for a period of
at least one year, or have a disability expected to
end in death.
• Can You Rely only on Workers Compensation?
Workers Compensation only covers job-related
sickness or injury. In addition, these benefits may
be limited.
• Can You Rely only on Your Savings?
If you saved just 5 percent of your income each
year, a 6-month disability could wipe out 10
years of savings, and when savings are gone your
other assets would also begin to dwindle. Would
family or friends be willing to help you when
your savings are depleted?
The sure thing is to protect your most valuable asset—
your ability to earn an income for yourself, your family,
and your business. A quality individual disability
income protection policy can help meet your needs
today and into the future. (Source: Most recent Insurance
Commissioner’s Individual Disability Tables, 1985.)
7. Consider self-insuring or partially self-insuring
some risks. To save costs and improve your loss record,
consider increasing deductibles on your policies, implementing a well-designed self-insurance program, or
installing a Workers Compensation Retrospective plan.
May 2009
Colorado Automobile Dealers Association
3
From the President
AUTO DEALERS TAKE BRUNT OF THE COST TO RUN
THE INDUSTRY...NOT THE MANUFACTURERS
Colorado could lose over 5,000 jobs in the auto retail sector and as many as 60 new
car dealerships could close their doors in the weeks ahead when GM and Chrysler use
bankruptcy reorganization to carry out their plans to restructure dealer networks. The
bankruptcy plans underway will allow both companies to set aside legal obligations to
honor franchise agreements and state laws that were designed to protect consumers, small
business owners and jobs. We need Colorado’s Congressional Delegation to act now to
contact the President and the Treasury Department’s Automotive Task Force to demand
that consumers, dealers and their employees be treated equitably, and that their livelihoods and their investments NOT be cast aside in a bankruptcy proceeding.
Tim Jackson
CADA President
What is needed
is a serious
plan to cut
manufacturing
costs and enable
U.S. manufacturers
to be competitive
with others
importing and
operating in
our countryʼs
pro-consumer,
open marketplace.
4
The cost of operating car dealerships is borne almost entirely by dealers, not manufacturers.
So eliminating dealerships doesn’t save troubled automakers anything significant, and
it will most likely add to their troubles by decreasing revenue, further eroding market
share and inconveniencing consumers. Dealerships are the primary customers of the
vehicle manufacturers. Talk about further elimination of dealerships is simply a smokescreen to deflect blame for their own management and bad decisions that put these
companies at risk originally. Closing dealerships does nothing to improve an automakers’
chance of economic survival, but it will hurt consumers, those who benefit most from
the convenience and competition offered by independently operated new car dealerships.
Drastically reducing the number of dealerships will also have a devastating impact on
local communities where dealerships exist, especially in rural Colorado and rural
America, on dealership employees and the businesses that sell products and services to
dealerships. When dealerships go away, so do the tax revenues and charitable
contributions generated by the dealerships for the communities they serve.
Most people don’t realize it, but nationally, new car dealers have invested billions of their
own dollars to create a vast distribution system of independent entrepreneurs that directly
benefits manufacturers, consumers and the communities in which they are located. Dealers are independent entrepreneurs who pay for
their own inventory before the vehicles ever leave
the factory. They pay for parts used to repair cars
before ever receiving them. Dealers pay all their
own employee costs and all their own real estate
expenses. Dealers foot the bill for their own
computers and other operating and administration
costs. Dealers pay for all their own service equipment and tools, training and diagnostic equipment. The list goes on.
It should be clear that automakers need dealers
now, more than ever, and that it is crucial for
dealers and manufacturers to work cooperatively
to help sell their way back to economic viability.
Indeed, without the dealers’ capable and enthusiastic support, one thing is certain: Chrysler will
not emerge from bankruptcy and GM’s efforts
Colorado Automobile Dealers Association
May 2009
Dedication of Bud Wells Room
at rehabilitation will fail. What is needed is a serious plan to cut manufacturing costs
and enable U.S. manufacturers to be competitive with others importing and operating
in our country’s pro-consumer, open marketplace.
There is no question that in this economy—with slumping car sales, sagging
consumer confidence and tight credit—there will be a natural attrition of dealers.
But it should be the invisible hand of the marketplace, not the heavy hand of the
manufacturers in Detroit or the Bankruptcy Court in Manhattan or the president’s
Auto Task Force, that dictates which Colorado dealers survive. It is a sad but true
fact that, since January of 2007, Colorado has lost three percent of its dealerships,
many dealership jobs and hundreds of millions of dollars in tax revenue. If GM and
Chrysler are permitted to use bankruptcy reorganization to carry out their plans to
forcibly restructure dealer networks, Colorado will lose another 5,000 jobs in the auto
retail sector and more than 60 Colorado new car dealerships in the weeks ahead.
It should be clear that car dealers are part of the solution, not the problem. We need Colorado’s Congressional Delegation to act now to contact the President and the Treasury Department’s Automotive Task Force to encourage the administration to tell these troubled
manufacturers and the Bankruptcy Court that eliminating dealers is not beneficial to the
public interest and will surely undermine the automakers’ chances for recovery.
May 2009
Colorado Automobile Dealers Association
5
Under the Gold Dome
DEALERS EXPERIENCE EXTRAORDINARY
LEGISLATIVE SUCCESS IN 2009 SESSION
Despite a down economy, manufacturer bankruptcy and dealer consolidation, Colorado
auto dealers made significant, if not historic, progress at the State Capitol this year.
Among the several victories experienced by dealers, the largest was the passage of
CADA’s seven-point franchise bill, SB09-091. This bill, sponsored by Sen. Chris Romer
(D-Denver) and Rep. Joe Rice (D-Littleton), passed out of the House and Senate with
significant bipartisan support and was signed into law by Gov. Ritter on April 2. The bill
has an implementation date of July 1, 2009, and accomplishes seven main objectives, as
indicated in the summary box on the next page of this article.
Matt Tynan,
Tynanʼs, Denver
Don Hicks,
Shortline Auto, Denver
Legislative Policy Committee,
Co-Chairmen
The success of SB09-091 was not accomplished without significant political opposition.
At one point in time, there were more than 14 lobbyists working to kill our bill. These
lobbyists were hired by the Alliance of Automobile Manufacturers, General Motors,
Chrysler, Mazda, Honda, Harley
Davidson and the Motorcycle
Industry Council, to name a few.
Despite the efforts of these groups,
the sponsors of the bill and several
key legislators, including Senate
President Peter Groff (D-Denver),
stood strong with CADA and
understood the importance of this
bill to our local dealers and
(left to right) Rep. Joe Rice (D-Littleton),
Colorado’s economy. The bill
John Medved, Gov. Bill Ritter, Sen. Chris Romer
(D-Denver), CADA Lobbyist Melissa Kuipers, and
passed out of the Senate with 15
Don Hicks at the signing of SB0-091, the seven-part
co-sponsors and out of the House
franchise act CADA passed in the Colorado Capitol.
with 13 co-sponsors. Most impressive was the fact that more than 90 percent of the legislature voted in favor of SB09-091,
with only a handful of House members and one Senator voting against it. The signing of
SB09-091 was commemorated by Gov. Ritter with a special bill-signing ceremony in the
governor’s office, attended by CADA dealers, staff and the sponsors of the bill.
Melissa Kuipers, Esq.
CADA Vice President,
Government Relations
& Communications
CADA also succeeded this year in making Colorado’s laws more favorable to dealers relative to sales tax collection, consumer bankruptcy, and providing consumer incentives for fuel
efficient vehicles. Here is a brief summary of our other legislative successes this session:
• HB 1230 by Rep. Ken Summers (R-Lakewood) and Sen. Abel Tapia (D-Pueblo).
This bill provides a hold harmless for dealers who collect taxes based on erroneous information provided by purchaser. In order to receive protections of this bill, a
dealer must inform the purchaser that providing false address information is illegal
and must obtain an affidavit from the purchaser that the address they have provided
is true and correct. In the event of an audit, dealers simply produce the consumer
affidavit, and they are held harmless of any fees, penalties or taxes due based on the
consumer’s false information. Keep in mind this bill does not extend to home rule
jurisdictions (including Denver), but we will be working this summer to have home
rule jurisdictions adopt a similar ordinance. Additionally, the bill directs the Transportation Legislation Review Committee to study the accuracy and availability of
state-approved sales tax databases, the frequency of how often these databases are
6
Colorado Automobile Dealers Association
May 2009
Under the Gold Dome
updated, the efficiency of the collection of sales tax on the sale of motor vehicles by home rule counties and
municipalities, and the number of occurrences in which motor vehicle registrations and titles are returned to
the dealer due to sales tax discrepancies.
• SB 150 by Sen. Rollie Heath (D-Boulder) and Rep. Claire Levy (D-Boulder). This bill prevents consumers
from taking advantage of the bankruptcy laws to the detriment of dealers and lien holders. Prior to the passage
of this bill, consumers would purchase a vehicle only to declare bankruptcy days later before the dealer was
able to file and perfect the lien. CADA successfully lobbied the proponents of the bill and the bill sponsors
provide a 30-day perfection deadline (instead of the 20 days that was in the original bill), while still keeping all off the
h bbenefi
fits
for creditors under the UCC, which was intent of the bill. Since Gov. Ritter signed the bill and it is now law, should the consumer
bankruptcy scenario indicated above ever occur, dealers and lien holders now have a super priority interest in a bankruptcy
proceeding as of the date of the perfection of the lien, presuming it is done within 30 days of the sale.
• HB 1331 by Rep. Sara Gagliardi (D-Arvada) and Sen. Betty Boyd (D-Lakewood). The bill provides tax incentives for
efficient motor vehicles. Vehicles covered by this bill include light-duty passenger trucks, medium-duty truck diesel-electric
hybrids, hybrid conversions, CNG, and vehicles that have had the installation of idling reduction technology. The bill originally
attempted to tie these incentives to the CAL-LEV standard, but CADA successful stripped that language out of the bill. This bill
passed out of the legislature on the last day of session and is expected to be signed by Gov. Ritter soon.
SUMMARY OF SB09-091
5
Warranty and Sales Incentives Audits - Requires dealers to submit warranty and sales incentive claims within 15
months of making sale or providing service. Manufacturer shall have 15 months from the date these claims were submitted to
audit the dealer.
5
Dualing - Protects dealers from manufacturer mandates to build and maintain facilities exclusive to one line-make.
Requires dealers to provide 90-day written notice manufacturers of their intent to acquire additional automobile brands in an
existing facility.
5
Incentives tied to facility upgrades - Protects dealers from manufacturer mandates to upgrade existing dealer facilities. If manufacturer offers incentive programs to dealers to upgrade facilities, these programs must be offered to all dealers
equally in Colorado.
5
Pricing variances - Requires manufacturers to offer price incentives to all dealers equally in Colorado. The dealer in
rural Colorado would be provided with the same low prices or sales incentives offered by the manufacturer that are offered to
a dealer in urban Colorado.
5
Termination & Market Withdrawal - If a manufacturer discontinues production of certain lines motor vehicles, they
must provide the dealer with payment for 12 months of rent for their facility and the goodwill value of the dealership on the
date the announcement is made to terminate the brand.
5
Buy/Sell/Transfer/Change of Management/Relocation - Currently, manufacturers have to approve a buy/sell/
transfer/change of management or relocation of a dealership. The law has been amended to require that they provide their
approval or disapproval within 80 days, with an inclusionary timeline of 20 days to tell the dealer specifically what documentation it needs to render a decision.
5
“Grandfather-in” existing manufacturer, but prohibit future licenses - There is one truck manufacturer currently
selling used trucks in Colorado, and this law “grandfathers” them in, and prohibits any further manufacturers from selling
used vehicles. The sale of new vehicles by manufacturers is already prohibited.
May 2009
Colorado Automobile Dealers Association
7
Litigation and Legal Trends
OVERVIEW OF DEALERSHIP LITIGATION
AND LEGAL TRENDS ACROSS THE STATES
The CARLAWYER© By Thomas B. Hudson and Emily Marlow Beck
Tom and Emily are partners in the law firm of Hudson Cook, LLC. Tom (tbhudson@hudco.com) is the author of a book, CARLAW®, and, with Emily (ebeck@hudco.
com), is the Editor/author of the CARLAW® F&I Legal Desk Book. The books are available at www.counselorlibrary.com. Tom is also the publisher of Spot Delivery®, a
monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry (not to be confused with the book). Spot Delivery, CARLAW and the books are produced by CounselorLibrary.com LLC. For information, call 410-865-5411 or visit
www.counselorlibrary.com. Copyright CounselorLibrary.com 2008, all rights reserved. Single publication rights only, to the Association. HC# 4848-2472-1411 (10/08).
In this column, we report selected federal and state legislative and regulatory highlights, and a recap of some of the many auto sale and
financing suits we track each month. Be careful—what we report here is not every recent development, just ones that we think are of
particular interest to car dealers—and note that this column does not offer legal advice. You need to consult your lawyer with questions.
We include items from other states. Why? For two reasons. First, we want you to be able to see trends, and, second, another state’s laws
might be a lot like your own state’s laws—if laws are being enacted there, or AGs or plaintiffs’ lawyers are pursuing particular types
of claims, those laws and claims might be subjects you need to focus on. As always, though, you need to check with your own lawyer
before you rely on anything we report or if you have any questions.
Federal Law
•
The Truth in Lending Posse Just Got Bigger. The U.S. Senate recently passed the Omnibus Appropriations Act of 2009 (HR
1105), which would give state attorneys general new authority to enforce the Truth in Lending Act. The bill would also give
the FTC new authority to assess civil penalties for violations of Regulation Z provisions regarding unfair, deceptive, or abusive
mortgage lending practices. Under the bill, the FTC’s new civil penalty authority would apply to any regulation issued by the
Federal Reserve Board under Section 129(l)(2) of TILA. On July 30, 2008, the Board issued such regulations, which take effect
beginning on Oct. 1, 2009. The FTC may assess civil penalties of up to $16,000 per violation. President Obama is expected to
sign the bill into law. If the bill becomes law with the TILA enforcement tools included, we will provide a more detailed look
at these provisions. Refer to the pending federal legislation in CARLAW in order to link to the full text of H.R. 1105.
• The Feds Draw a Bead on the Used Car Market. On March 5, the U.S. House Committee on Energy and Commerce, Subcommittee on Commerce, Trade and Consumer Protection, held a hearing titled “Consumer Protection in the Used and Subprime Car Market.” The FTC’s Acting Director testified at the hearing and identified three main consumer protection issues in the used car market:
(1) making sure consumers get important information about used cars so they can make sound purchasing decisions; (2) preventing
deception in the financing of used cars; and (3) helping consumers avoid debt cycles that can lead to repossession of their cars.
• From the FTC’s Complaint File . . . The Federal Trade Commission has released its list of the top consumer complaints in
2008, showing that, for the ninth year in a row, identity theft is the number one consumer complaint category. The category
“Banks and Lenders” ranked number 9, and “Auto Related Complaints” was ranked number 16.
State Legislative and Regulatory Developments
•
Razorbacks Need to Hurry. Arkansas HB 1602 amends Arkansas Code, Title 27, Chapter 14, Subchapter
9 concerning the time period that car dealers are required to pay off existing liens or encumbrances on
vehicles. SB 431 amends Section 5-37-203 of the Arkansas Code which concerns the defrauding of a
secured creditor.
• Montana Filing Duties. Montana SB 152 amends the Montana Code Annotated, Section 61-3-103, which
governs the filing of security interests in motor vehicles, and amends provisions concerning motor vehicle
registration.
• More Bookkeeping in Nevada. The Nevada Department of Motor Vehicles adopted rules requiring vehicle
dealers and brokers to maintain certain books and records associated with every vehicle acquired or sold,
and requiring dealers to enter into consignment agreements before displaying or offering for sale a vehicle
owned by another person.
• Taxing News from North Dakota. North Dakota SB 2325 amends provisions related to the sales tax on
tangible personal property.
• Ohio Dealers – Get Richer and More Organized! The Ohio Department of Public Safety revised regulations
8
Colorado Automobile Dealers Association
May 2009
Litigation and Legal Trends
governing the recordkeeping requirements for manufactured home brokers and the place of business requirements
for manufactured home brokers, motor vehicle leasing dealerships, and motor vehicle auction owners. The
regulations also increased net worth requirements for motor vehicle dealers from $10,000 to $75,000.
• Activity in the Beehive State. Utah HB 54 amends Section 41-1a-203 of the Utah Code related to
prerequisites for registration, transfer of ownership, and registration renewal of vehicles. HB 113 modifies
the Motor Vehicles Act by amending provisions relating to salvage vehicle titles.
• Virginia Protects its Dealers. Virginia SB 1410 revises and clarifies responsibilities of manufacturers
toward motor vehicle dealers in the event of termination of a dealer franchise.
• And, Finally, “Un-taxing” News From Wyoming. Wyoming HB 230 exempts the sales of vehicles to
residents of other states from the sales tax.
Litigation
Things aren’t slow in Lawyer-ville. Here’s our report on some of the more interesting lawsuits that courts reported this month.
• Rescission of Spot Delivery Deal Did Not Rescind Stand-Alone Arbitration Agreement: A car buyer signed a retail installment
sale contract that contained an arbitration clause and also signed a separate stand-alone arbitration agreement. After the dealership
rescinded the spot delivery transaction, the buyer sued for numerous violations of state and federal law. The dealership moved
to compel arbitration pursuant to the stand-alone arbitration agreement, and the trial court granted the motion. The U.S. Court of
Appeals for the Eleventh Circuit affirmed, concluding that rescission of the RISC did not result in rescission of the stand-alone
arbitration agreement. See Scott v. EFN Investments, LLC, 2009 U.S. App. LEXIS 3035 (11th Cir. (S.D. Fla.) Feb. 17, 2009).
• Finance Company Did Not Waive Right to Compel Arbitration by Sending Collection Letter that Threatened Litigation:
A car buyer sued the assignee of her retail installment sale contract, a repossession company, and other parties arising out of
the repossession of her car for nonpayment. The assignee moved to compel arbitration pursuant to an arbitration clause in her
RISC. The U.S. District Court for the District of Minnesota determined that the assignee of the RISC was entitled to invoke the
arbitration clause and did not waive its right to compel arbitration by having a lawyer send a collection letter that failed to
mention arbitration and threatened litigation. See Lindsley v. DaimlerChrysler Financial Services Americas LLC, 2009 U.S.
Dist. LEXIS 10871 (D. Minn. Feb. 11, 2009).
• Creditors Had Permissible Purpose to Access Credit Report After Dealership Referred Credit Application: A dealership
submitted a car buyer’s credit application to several creditors through an electronic service. Three creditors denied the application
after considering the buyer’s credit report. The buyer sued the dealership and the creditors for violating the Fair Credit Reporting Act by obtaining her credit report without a permissible purpose. The parties filed cross-motions for summary judgment. The
U.S. District Court for the District of Utah granted the creditors’ motions for summary judgment, concluding that the creditors
obtained the buyer’s credit report for a permissible purpose where the record showed the creditors obtained her credit report only
in connection with the credit application and not for any impermissible reason. The court rejected the buyer’s argument that the
creditors must have reasonable procedures in place to ensure that they request credit reports for only permissible purposes. See
Enoch v. Dahle/Meyer Imports, LLC, 2009 U.S. Dist. LEXIS 16042 (D. Utah Feb. 27, 2009).
• Dealership’s Completion of Legal Documents and Charging of Doc Prep Fee Not Unauthorized Practice of Law:
A vehicle buyer sued the dealership where he bought his car, claiming that the dealership engaged in the unauthorized practice
of law by preparing the sale documents and charging a fee for document preparation. The U.S. District Court for the District
of Colorado granted the dealership’s motion for summary judgment, noting that the practice of law does not include the
completion of forms, such as the dealership’s documents, that do not require any knowledge and skill beyond that possessed
by the ordinary experienced and intelligent layperson. Moreover, the court found that the charging of a fee for the document
preparation did not transform the document preparation into the practice of law. See Newman v. Ed Bozarth Chevrolet
Company Inc., 2009 U.S. Dist. LEXIS 15306 (D. Colo. Jan. 5, 2009).
• Car Buyers Stated Claim for TILA Violations By Alleging That Finance Company Had Co-Buyer Sign Blank RISC: Cobuyers of a car sued the assignee of their retail installment sale contract, alleging violations of, among other statutes, the federal
Truth in Lending Act. The finance company moved to dismiss, but the U.S. District Court for the Eastern District of Pennsylvania
denied the motion, concluding that the co-buyers stated a claim for TILA violations by alleging that the finance company was
a creditor under TILA and that it made the co-buyer sign a blank contract that did not contain required TILA disclosures.
See Molley v. Five Town Chrysler, Inc., 2009 U.S. Dist. LEXIS 13765 (E.D. Pa. Feb. 20, 2009).
Automotive Summit...Green Tie Charity Preview...Denver Auto Show
May 2009
Colorado Automobile Dealers Association
9
Regulatory & Legal News
RED FLAGS: ENFORCEMENT DEADLINE DELAYED AGAIN
Dealers should still ensure compliance for their own protection
The FTC issued an announcement the last week in April extending (yet again) the enforcement deadline for Red Flags from May 1
to Aug. 1, 2009. Keep in mind, compliance is still technically required; this delay is only on their active enforcement. It is still in a
dealerships’ best interest to take all steps possible to prevent ID theft—lenders will require dealerships to buy back any paper on an ID
theft case, and you will be left sorting out the legalities, paying in full for any loss upfront, and filing a claim with your insurance carrier. A link to the FTC’s notice on this topic follows www2.ftc.gov/opa/2009/04/redflagsrule.shtm
See below for some helpful, prior Open Road articles on Red Flags, which can be found online at www.cadaopenroad.org/enewsletter/
October 29, 2008
RED FLAGS RULE COMPLIANCE DATE DELAYED BY
FTC; BUT DEALERSHIPS MAY STILL NEED TO BE IN
COMPLIANCE BY NOV. 1
Address Discrepancy Rule that
took effect on Nov. 1, 2008
October 8, 2008
REMINDER: NEW FEDERAL RED FLAGS & ADDRESS
DISCREPANCY RULES: COMPLIANCE DEADLINE IS
NOV. 1
Includes link and helpful tip on
Social Security #s; first 3 digits
link to where person resided when
Social Security # was obtained
October 1, 2008
REMINDER: NEW FEDERAL RED FLAGS & ADDRESS DISCREPANCY RULES: COMPLIANCE
DEADLINE IS NOV. 1
-Overview of 10 key steps
-26 sample red flags from rule
- Link to NADA publication, L50
INCREASING LATE FEES APPLY TO MOTOR VEHICLE REGISTRATION AS OF JUNE 1
Dealers should advise consumers on necessary steps to avoid late fees
Motor vehicle registrations due June 1st, 2009 and after in Colorado are subject to mandatory, increasing
late fees – from $25.00 for the first month up to $100.00. Colorado counties have asked CADA to help
communicate these recently enacted legislative changes—so that dealerships can advise purchasers of
potential late fees. While there had been a $10 late fee in place previously, it was not mandatory that all
counties assess it—from what we have been able to determine, Adams and Jefferson counties had not
implemented late fees on new registrations. Additionally, counties do not have any option to waive these late fees due to individual
circumstances, or particulars of a situation, such as county offices being closed due to a holiday or other title delays). Counties attempted
to retain such discretion from the legislature, but were unsuccessful.
While there is a one-month grace period on motor vehicle registration renewals, that grace period does not apply to temporary permits
and initial registrations. For temporary permits, if there are title processing delays on a new registration that delay registration past the initial 60-day temporary permit period, it will be necessary to take appropriate action and ensure issuance of an
additional temporary permit prior to the expiration date of the current permit to avoid the late fees. (If an additional permit is
issued prior to expiration of the last permit, then the charge is $6.22). A temporary permit is considered “a registration,” so if a vehicle
owner has an unexpired temporary permit in place at the time of the next transaction, a late fee would not be assessed. Be aware that
holidays and weekends do not extend the expiration date; the sixty days is by strict calendar-days.
Additional clarification on these late fees:
• Counties retain the first $10 of these late fees—the rest goes to the state (just information for everyone in their taxpaying capacity)
• Vehicle owners who move from out of state and do not register within 90 days of residency will also be charged these late fees
• Exemptions to the late fees allowed by the new law are the “commercial business idle” exemption and the “active military
exemption.” Proof for those exemptions should be documented with a Statement of Fact form.
10
Colorado Automobile Dealers Association
May 2009
Regulatory & Legal News
TITLE AND REGISTRATION — FORM REVISION: DR 2539
The following form has been revised by the Forms Committee and the State Title Section:
DR 2539, Title Information Request and Receipt (03/23/09)
The 90-day cutoff does apply to this change. The changes to this form include an addition to the forms
that are required to be included when completing the DR 2539. The revised form must be used beginning
6/23/09.
VENDOR FEE ELIMINATED AS OF JULY 1, 2009
The Colorado General Assembly passed SB 09-275, which eliminates any amount that vendors such as automotive retailers/dealers
can deduct from state sales tax collections as part of covering costs to provide this function for government. Last month we alerted
you to a reduction in the vendor fee, but this subsequent legislation eliminates it for a period of time until at least June 30, 2011.*
The governor signed this bill on May 19.
*NOTE: The elimination of the vendor fee only returns at
that time if the September 2010 state revenue forecast
shows a full six percent increase in general fund spending.
This legislation was fought hard by CADA and many other
business groups many times over at the capitol this year, but
ultimately passed. The effective date is July 1, and it applies to
any return made on or after that date. The allowable vendor fee
(also referred to as “service fee”) remains at the previously
reduced 1.35% rate from March 1 - July 1.
There is a hold-harmless that applies for any returns filed
between July 1 and Aug. 1, 2009. So if the vendor fee is withheld,
the adjustment can be made following month.
Other clarifications:
• This is an elimination of the vendor fee for state sales and use tax, it does not affect local vendor/service fees
• There is no change to the state sales/use tax rate which remains at 2.9 percent.
REMINDER: NEW I-9 REQUIRED AS OF APRIL 3, 2009
As of April 3, 2009 all employers should be using a new I-9, Employment Eligibility Verification Form, to verify the identity and work
authorization of new hires. No previous edition of the form is acceptable.
The new I-9 form is available on the U.S. Citizenship and Immigration Services (USCIS) website at www.uscis.gov/i-9 and has a
02/02/09 revision date (note the “Rev. date” is at the bottom of the form; the date of 6/30/09 at the top of the form is an “expiration date”).
The USCIS has also released a new edition of its popular Handbook for Employers. To obtain the new
Handbook (Rev. 04/03/09), visit the USCIS I-9 web page just noted or visit the April 1, 2009 issue of Open
Road at www.cadaopenroad.org.
Employers will notice some major changes to the employment eligibility verification process. Most significantly, all documentation offered for I-9 purposes must be unexpired at the time it is presented. This marks
a complete change from existing I-9 procedures.
May 2009
Colorado Automobile Dealers Association
11
From the NADA Director
AUTO DEALERS ARE URGING CONGRESS TO
INTERVENE WITH THE OBAMA ADMINISTRATION
TO OPPOSE DRASTIC DEALER CUTS
More than 100 new-car dealers will meet face-to-face today with select members of the
House and Senate to ask them to urge President Obama’s auto task force to slow down
plans to rapidly reduce General Motors and Chrysler’s dealer networks.
“A rapid cut of dealers is a bad idea,” says John McEleney, chairman of the National Automobile Dealers Association, the trade group that organized the dealer fly-in. “This would
have adverse effects on the auto industry and hurt an already struggling U.S. economy.
Jeff Carlson
Glenwood Springs Ford
Colorado NADA Director
Chairman, NADA Convention
“It will result in another 200,000 Americans losing their jobs,” McEleney added.
“State and local governments will lose millions of dollars in auto sales tax revenue that
is essential for economic recovery.
“We’re not arguing against dealer consolidation,” McEleney says. “Our concern is
with the accelerated timeframe. Keep in mind that dealers are not a cost center for their
manufacturers. Dealers are an automaker’s main source of revenue.
“Cutting dealers at this time would do absolutely nothing to make either GM or Chrysler
more viable,” McEleney says.
NADA launched
an ad campaign
in the form
of an open letter
from McEleney to
President Obama
questioning why
his auto task force
is demanding
drastic cuts
in the number
of U.S. dealers.
NADA Launches Ad Campaign Against Drastic Dealer Cuts
NADA launched an ad campaign in the form of an open letter from McEleney to
President Obama questioning why his auto task force is demanding drastic cuts in the
number of U.S. dealers. Full-page print ads were published in The Washington Post,
Politico, Automotive News, Roll Call, Chicago Tribune and Chicago Sun Times (see
facing page for a copy of the ad).
“Cutting dealers at this time would do absolutely nothing to make either GM or Chrysler
more viable,” the letter states. “The idea that dealer numbers should be rapidly and
drastically reduced apparently comes from Wall Street.
“Mr. President, we urge you to choose
Main Street over Wall Street.”
Full-page print ads are scheduled to run in The Washington Post, Politico and Automotive
News. NADA also organized a dealer fly-in so dealers could meet with members of Congress on May 13. NADA officials also met with the president’s auto task force on May 14.
“It makes no sense for an automaker to radically cut its dealer network,” says McEleney,
a GM, Toyota and Hyundai dealer in Iowa. “Manufacturers need revenue, and the only
way to get it is to sell more cars to dealers.
“In other words, dealers equal revenue for their manufacturers,” McEleney added. “A
radical reduction of dealers would put 150,000 Main Street Americans out of work and
cut state and local government auto sales tax revenue by millions of dollars.”
12
Colorado Automobile Dealers Association
May 2009
-R0RESIDENTYOUSAIDYOUWOULD
STANDWITH!MERICA´SAUTODEALERS
So why is your automotive task
force demanding drastic cuts
in the number of dealers in this
country?
r 'FXFSEFBMFSTXPVMENFBO
another 150,000 Main Street
Americans will lose their
jobs.
r 'FXFSEFBMFSTXPVMENFBOMFTTDPOWFOJFODFGPSDPOTVNFSTBOEMFTT
competition.
r 'FXFSEFBMFSTXPVMENFBOMFTTSFWFOVFGPSUIFBVUPNBLFSTEFBMFST
are the manufacturers’ customers, buying the vehicles and the parts
and even the signs in front of their dealerships.
r 'FXFSEFBMFSTXPVMENFBOTUBUFBOEMPDBMHPWFSONFOUTXJMMMPTF
millions of dollars in auto sales tax revenue.
Cutting dealers at this time would do absolutely nothing to make either
GM or Chrysler more viable. The idea that dealer numbers should be
rapidly and drastically reduced apparently comes from Wall Street.
-R0RESIDENTWEURGEYOUTOCHOOSE-AIN3TREETOVER7ALL3TREET
John McEleney
Chairman, National Automobile Dealers Association
and
President, McEleney Autocenter, Clinton, Iowa
NADA, founded in 1917 and based in McLean, Virginia, represents the
nation’s new-car and -truck dealers, domestic and international.
May 2009
Colorado Automobile Dealers Association
13
CADA Board of Directors & Staff
OFFICERS
Chair of the Board
Nancy Ariano
New Country Auto Center, Durango
Vice Chair
Mike Faricy
The Faricy Boys, Colorado Springs
Robert Fuoco
Jim Fuoco Motor Company
Grand Junction – District #11
Steve Nilsson
Glenwood Springs Ford
Glenwood Springs – District #12
Jeff Carlson
Glenwood Springs Ford
Colorado NADA Director
Chairman, NADA Convention
Secretary
Don Hicks
Shortline Auto, Denver
Treasurer
Don Gerbaz
Berthod Motors, Glenwood Springs
CADA STAFF
Immediate Past Chair
Bob Ghent
Ghent Motor Co., Greeley
President
Tim Jackson, CAE
tim.jackson@coloradodealers.org
303.282.1448
DIRECTORS
Vice President
Tammi L. McCoy
tammi.mccoy@coloradodealers.org
303.282.1449
Lee Payne
Planet Honda
Golden – At-Large
Vice President Government Relations and Communications
Melissa Kuipers, Esq.
melissa.kuipers@coloradodealers.org
303.457.5115
Gregg Stone
Kuni Lexus
Englewood – District #1
Bond Coordinator
Linda Toteve
linda.toteve@coloradodealers.org
303.457.5122
Jim Suss
Suss Buick Pontiac GMC
Aurora – District #2
CADA F&I Resource Center Manager
Michelle Chavez
michelle.chavez@coloradodealers.org
303.457.5119
John Schenden
Pro Chrysler Jeep
Thornton – District #3
Jack TerHar Jr
Sill TerHar Motors
Broomfield – District #4
Ed Tynan
Tynan’s Fort Collins Nissan-Kia-Saab
Ft. Collins – District #5
Wes Taber
Honda of Greeley
Greeley – District #6
Jon Lind
Burlington Ford Lincoln Mercury
Burlington – District #7
Elizabeth Daniels-Winston
Daniels Chevrolet
Colorado Springs – District #8
Bill Wilcoxson
Wilcoxson Buick Cadillac GMC
Pueblo – District #9
Jim Morehart
Morehart Chevrolet
Durango – District #10
14
Insurance Services - Account Manager
Deb Lay
deb.lay@coloradodealers.org
303.282.1453
Insurance Services - Account Manager
Bob Kogel
bob.kogel@coloradodealers.org
303.282.1457
Executive and Communications Assistant
Lauren Stadler
lauren.stadler@coloradodealers.org
303.457.5123
Services Coordinator
George Billings
george.billings@coloradodealers.org
303.457.5117
CADA Headquarters • William D. Barrow Building
290 E. Speer Blvd. • Denver, CO 80203
Phone: 303.831.1722 • Fax: 303.831.4205
Website: www.coloradodealers.org
Colorado Automobile Dealers Association
May 2009
Calendar of Upcoming Events & Seminars
EVENT DESCRIPTION
LOCATION
DATE/TIME
CADA VIRTUAL ONLINE SEMINARS:
• Manufacturer Bankruptcy: What
it Means & Proactive Steps for You
to Prepare
• Employer Requirements for New
COBRA Subsidy
Archives of these
webinars can be
viewed online any
date/time
For more information go to
www.coloradodealers.org/calendar
(login information and slides
provided upon registration)
Reception, Lunch and Dedication of
the “Bud Wells Board Room”
Wednesday, June 10
Denver
Light lunch served
William D. Barrow Building
(CADA/MDADA Headquarters)
290 East Speer Blvd, Denver
RSVP Lauren Stadler, 303.457.5123
lauren.stadler@coloradodealers.org
Reduction in Force and Employee
Terminations
By Todd Fredrickson,
top Denver employment attorney,
Fisher & Phillips, LLP
Thursday, June 18
12 to 1:30 p.m.
1 to 2:30 p.m.
(time tentative)
WEBINAR/VIRTUAL SEMINAR
In down economic times, reductions in
force and terminations can lead to costly
lawsuits. This session will cover how to
minimize the risk of employee claims and
lawsuit, and also address relevant laws/
regulations as well as tips on employee
communications.
Registration information
available soon!
ONLINE
Controllers: Taxation issues and DMS
Cost-Reduction
Presenters:
• Bruce Nelson, CPA
• Brad Bowers, CPA
• Paul Gillrie, The Paul Gillrie Institute
Wednesday,
July 15
7:30 a.m. to Noon
(time tentative)
Denver
William D. Barrow Building
(CADA/MDADA Headquarters)
290 East Speer Blvd, Denver
CPAs will review lessons learned from
recent dealership tax audits, and advise
dealerships on areas of risk in state/
local tax audits as well as other sources
of liability. Paul Gillrie, national consultant
and expert on DMS system negotiations,
reducing monthly costs/billing analysis,
and on the DMS market overall.
Registration information
available soon!
Dealer Management & Leadership
Summit
Thursday, Aug. 13
8 a.m. to 7:30 p.m.
Denver - Park Meadows
CADA Annual Member
Golf Event
Monday, Aug. 24, 2009
12 Noon Shotgun Start
Cherry Hills Village
Marriott Denver South
at Park Meadows Drive (I-25 and
Lincoln in Douglas County)
Save the date! More information
on speakers and agenda will be
posted online as finalized:
www.coloradodealers.org/summit
Glenmoor Country Club
110 Glenmoor Drive
Cherry Hills Village, 80113
303.781.3000
www.glenmoorcc.org
For the most current list of CADA seminars and events,
please be sure to bookmark and visit the online calendar at
www.coloradodealers.org/calendar
April 2009
Colorado Automobile Dealers Association
15
Virtual Webinars
Donʼt miss this upcoming online seminar!
Reduction in Force and Employee Terminations
By Todd Fredrickson, top Denver employment attorney, Fisher & Phillips, LLP
Thursday, June 18th — 1 to 2:30 p.m. (time tentative)
In down economic times, reductions in force and terminations can lead to costly lawsuits. This session will
cover how to minimize the risk of employee claims and lawsuit, and also address relevant laws/regulations as
well as tips on employee communications.
Registration information available soon!
Did you miss either of these recent seminars? Guess what?
Archives of these webinars can be viewed online any time!
Manufacturer Bankruptcy:
What it Means and Proactive Steps for You to Prepare
Understand your rights and responsibilities in a bankruptcy proceeding from
both Colorado-based attorneys and from Washington D.C.-based counsel
Employer Requirements for New COBRA Subsidy
Learn what you need to do to meet your obligations under this new act
from speaker Penny Wofford, Ford & Harrison LLP
Go to www.coloradodealers.org/calendar
for a registration form and more information
(login details provided upon registration).
Each virtual seminar includes detailed Q&A
and slides provided upon registration.
AUTO INDUSTRY RESOURCES
•
•
•
Auto Industry Division: 303.205.5746, www.colorado.gov/revenue/AID
Titles/Registration: 303.205.5608, www.colorado.gov/revenue/dmv (Select “Title - Register a Vehicle” link)
Department of Revenue Taxation: www.colorado.gov/revenue/tax
Bulletin questions or comments? If you have questions about items in this newsletter or suggestions for future
articles, please contact Lauren Stadler at 303.457.5123 or e-mail to lauren.stadler@coloradodealers.org.
DISCLAIMER: CADA IS NOT AUTHORIZED TO DISPENSE LEGAL ADVICE. THE INFORMATION CONTAINED IN THIS NEWSLETTER IS FOR
INFORMATIONAL PURPOSES ONLY. CADA ADVISES THAT DEALERS CONSULT LEGAL COUNSEL ON THE SPECIFICS OF ANY LAW OR
REGULATION TO ENSURE FULL COMPLIANCE.