On August 1, 2018, the Federal Trade Commission filed criminal charges against four dealerships operating in Arizona and New Mexico. The allegations include a wide array of illegal activity including submitting false credit applications, altering credit applications, and deceptively advertising vehicles. Along with the four dealers, two individuals, owners of the dealerships, were also named. This is the first time the FTC has brought an enforcement action for falsifying credit applications.

California businesses are continuing to struggle to make sense of this year’s Dynamex v. Superior Court case, in which the California Supreme Court radically modified the test for determining whether someone working for a business is an employee or an independent contractor. Casting aside decades of developed multi-factor tests, the Supreme Court alighted on a new, simple, three-factor test. Under this test, to prove a worker is an independent contractor and not an employee, a business must show all three of the following...

The California Supreme Court recently struck a blow to Starbucks Corporation that will affect many employers state-wide. In the case Troester v. Starbucks Corporation, the plaintiff employee had filed a class action in employee-friendly state court, alleging that he and other employees were required to perform store-closing tasks after clocking out, without compensation. Starbucks removed the case to federal court and moved for summary judgment, in which it successfully argued that the employees’ post-shift work was not compensable under the federal de minimis rule, which provides that “insubstantial or insignificant periods of time…which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded.”

As we reported in our 2018 New Laws article, California Labor Code 432.3 imposed a new prohibition against an employer seeking or considering salary history (including compensation and benefits) of an applicant for employment. However, the new law, as originally drafted, left some ambiguities. Now, the Governor has signed AB 2282 into law, which clarifies the following ambiguities in Section 432.3...

The Los Angeles Business Journal has named Scali Rasmussen Founder and Managing Partner Christian Scali one of California’s top litigators. Scali’s diverse automotive industry practice includes advertising, consumer finance, data security, employment, franchise, corporate, LLC, and partnership control and ownership, flooring, reinsurance, debt financing, privacy and trade secret protection advice and counsel and litigation.

Dealers are justifiably concerned with possible tariffs on imported vehicles and vehicle parts. Although efforts are underway to push back on the 20 or 25 percent import tariffs threatened by President Trump, the rulemaking process is proceeding rapidly, and there is no predicting what the President will ultimately do.

At Scali Rasmussen we stay ahead of the curve on new and trending issues. In addition to publishing our monthly HR newsletter, Coffee Break, and our quarterly auto dealer newsletter, Ahead of the Curve, we are often called up to comment on new and trending issues, or asked to speak about relevant topics. Occasionally, our thought leaders are recognized for their contributions to the legal profession, while winning victories for our clients. Here are a few of the developments at Scali Rasmussen over the last quarter.

As we previously reported, on June 28, California adopted AB 375, the strongest privacy law in the nation. The new law is modeled somewhat on the European Union General Data Protection Regulation (GDPR), which famously purports to give customers the “right to be forgotten,” and gives consumers several new rights, aiming to bring more control and transparency to the murky trade and use of people's personal data. It also, for the first time, provides consumers with the ability to sue companies that mishandle their data without ever having to prove harm due to the misuse.

On July 12, 2018, the Federal Trade Commission (FTC), working with partner agencies, announced the results of a national “compliance sweep” of car dealerships that occurred between April and June of 2018. Many of the dealers involved in the sweep are located in California. The purpose of the sweep was to evaluate compliance with the new Used Car Rules that took effect earlier this year. The most significant change to the rule was the adoption of an updated Buyers Guide.

Certified Pre-Owned vehicles can attract more buyers and add profit to your bottom line, but don’t underestimate the importance of properly complying with the factory’s guidelines. Improper certification is a claim we see increasingly raised by consumer attorneys against dealers, and the CPO inspection is not limited to check-marking the appropriate boxes on the manufacturer’s CPO checklist.

Most of you are aware of the decision by the California Court of Appeal in Benson v. Southern California Auto Sales, Inc. (2015) 239 Cal.App.4th 1198, holding that a plaintiff cannot maintain a suit for damages if the defendant made an appropriate and timely correction offer under the Consumers Legal Remedies Act, or CLRA. The CLRA provides dealers with a “safe harbor” to settle a CLRA claim before suit is filed if an appropriate correction, repair, replacement, or other remedy is given, or agreed to be given within a reasonable time, to the consumer within 30 days after receipt of the notice of violation.

It received plenty of coverage in the national press last March when Los Angeles Superior Court Judge Elihu Berle issued his tentative ruling in a recent Proposition 65 case against roasters and sellers of coffee that would effectively require a clear and reasonable warning that brewed coffee contains a chemical known by the state of California to cause cancer, because coffee contains acrylamide, a listed carcinogen. This had far greater potential than just a judgment against coffee companies. The private enforcer / bounty hunters might well argue that any business with ten or more employees that served coffee—whether a restaurant, a coffee shop, or an automobile dealer with a coffee-serving lounge—would be required to warn coffee drinkers that they were being exposed to a chemical known to the State of California to cause cancer.

On June 11, the United States Supreme Court (SCOTUS) decided China Agritech, Inc. v. Resh, et al., No. 17-432 (U.S. June 11, 2018) (“China Agritech”), holding that the statute of limitations is not tolled for class claims during the pendency of a class action. This has important implications for class action defendants, in that it prevents subsequent class actions and extortionate class settlements on the same claims when class counsel (or new class counsel) finds a subsequent class plaintiff to file a successive class action suit on the same claims as an earlier class action. This tactic, known as “piggyback” class action filings, where an otherwise untimely class suit is filed on the theory that the time to sue is extended by the pendency of a prior class case, is common. But, no more. It is important to note, however, that China Agritech was decided under Rule 23 of the Federal Rules of Civil Procedure, not under the class action procedure available under California law.

Since the beginning of 2017 there have been a number of decisions issued by the Courts that have changed the legal landscape for businesses defending class actions in California. This article touches briefly on the decisions during that time that we see as the most significant.

Back when service loaner vehicles were an uncommon perk, parties to a buy-sell agreement may have simply treated them as “used vehicles” without any thought as to how to calculate their value. But now that service loaners are increasingly necessary under factory margin programs, or simply to offer competitive customer service, it is worth carefully considering how to address them when a dealership is sold.

Coverage has been breathless regarding AB 375, titled the California Consumer Privacy Act of 2018. Its history is dramatic; it went through the legislative process in only a few days in order to head off an onerous ballot initiative. The topic is similarly intense; over the last few years, data privacy and security events have dominated the news from business to politics. How will the new law affect dealerships?

A few weeks ago, a California Labor Commissioner investigation found Cheesecake Factory restaurants in Southern California liable for over $4 million in unpaid minimum wages, overtime, and meal and rest break violations, among other derivative wage and hour violations. However, these alleged violations were not committed against Cheesecake Factory’s own employees, nor were they committed directly by the Cheesecake Factory. The underpaid individuals were janitorial employees of a subcontractor used by the national cleaning firm contracted by Cheesecake Factory.

The Fair Employment and Housing Council’s new regulations regarding national origin discrimination have taken effect on July 1, 2018. The regulations augment the existing Fair Employment and Housing Act regulations with clarification on numerous concepts, including the definition of “national origin” and issues related to language, height/weight characteristics, immigration status, and more.

With the temperatures soaring, employers should take a refresher on their obligations to employees, especially those who work outdoors. Cal-OSHA has specific heat illness regulations in place that require training, employee monitoring, provision of facilities/supplies and supervisorial action.

"As Scali Rasmussen expands from its roots as a boutique automotive law firm to a diverse and more broadly focused litigation firm, there is no greater testament to the strength of our team and our reputation than when you can bring aboard someone like Jeffrey," said firm Founder and Partner Christian Scali.