Consumer Protection
Judith Popper
Spring 2015
1. The Federal Odometer Act
a. prohibits tampering with a motor vehicle's odometer
b. provides safeguards to protect purchasers in the sale of motor vehicles with altered or reset odometers
c. must be brought within 2 years if a private civil case by a person
d. AG can bring civilly or criminally (if there was willfulness or intent)
e. Suits v Litle Motor Co
i. Turning over odometer manifests intent to defraud
ii. Business practices had intent to defraud
1. They would sell the car prior to receiving the papers so they could indicate the true mileage was unknown
f. Jones v West Side Buick
i. It was not custom to roll back odometer
1. Even if it was, the plaintiff is not in the business/ trade and wouldn’t know
ii. Gave 13:1 punitive damages to deter this behavior from other car dealers
g. Williams v Miller Pontiac
i. There does not need to be a verbal representation to make a misrepresentation
ii. Offering a car at a new price is a representation
iii. Cannot roll back the odometer even if the seller tells the buyer because this could cause a domino effect
iv. The seller offered to rescind the offer completely for setting back the odometer – buyer refused
v. Look for legal malice
h. Slusher v Jack Roach Cadillac
i. Defendant said car had never been wrecked
1. Was wrecked and rolled back odometer 25K – 17K
ii. Defendant used argument that buyer purchased the car “as it”
iii. “as is” only relates to a breach of warranty in a contract claim
1. Presenting the as is clause to a jury in a fraud claim is confusing to the jury
iv. “as is” clause is not a defense to fraud, it only deals with warranties
1. EX: if the car breaks down under warranty, then you can bring it back to the dealer. But if the purchaser buys “as is” then they are taking the chance of not being able to bring the car back
i. Tesa v Ohaha Auto Auction
i. The material information needs to be passed on to whoever is using the car
ii. Negligence is not enough to prove fraud. Reckless disregard is a higher standard
iii. Having reckless disregard for the truth can reasonably infer a violation was committed with an intent to defraud the purchaser
iv. Cant purposely avoid learing the truth about something. They knew something was wrong with the odometer disclosure but they purposely turned a blind eye
v. They argue there was no intent to defraud. Intent is found in circumstantial evidence
vi. If a person lacks knowledge that an odometer disclosure statement is false only ecasue he displays a reckless disregard for the truth, a fact finder can reasonably infer that the violation was committed with intend to defraud the purchaser
2. Common law fraud
a. ELEMENTS:
i. FACT
1. Something that is measurable – NOT an opinion
2. But can be an opinion if the statement of a party having superior knowledge may be regarded as a statement of fact although it would be considered an opinion if the parties were dealing on equal terms
ii. THAT IS MATERIAL
1. Something of importance to a reasonable consumer in the person’s circumstances
2. This will be a big part of the argument – if it is material or not
iii. MISREPRESENTATION, DISTORTION, OMISSION
iv. INTENT BY DEFENDANT
v. PLAINTIFF JUSTIFIABLY RELIED
vi. HARM/ DAMAGES TO PLAINTIFF
1. Doesn’t need to be a huge amount
2. Plaintiff should get what the bargained for
3. Something is in the deal that was not represented
b. Kingy Towns
i. Door to door sales man told very low intelligence individual her pans were going to give her family cancer
ii. It was enough to show justifiable reliance by salesman saying “you can call these doctors”
iii. Even though there may not be multiple plaintiffs, can use the testimony of others to show this was a pattern, there was intent, and it was not a mistake
c. Halpert v Rosenthal
i. Seller had a house for45K sale. Potential buyer found out there were termites and backed out. Seller sued potential buyer because seller lost 20K on the sale
ii. Terminates are a material fact
iii. Innocent misrepresentation:
1. When you open you mouth and say something, you better make sure it is true and do not just INTEND it to be true
iv. Plaintiff argued the merger clause in the contract
1. Merger clause means that everything that was said orally or in writing is in this contract
2. This is a fraud claim because there was fraudulent inducement so the merger clause doesn’t matter
v. Key point: be sure to ask specific questions. It is easier to prove if there was a misrepresentation
vi. From Davey Case:
1. If you do not get the heart of what you bargained for, it should not be forced into the contract
2. Is something material has not been disclosed, and if it is material enough, the court will find a way to help the plaintiff relying on the material information
d. Vokes v Murray
i. 51 year old woman bought a ton of dance lessons. Just wanted back money from unused dance hours
ii. Misrepresentation usually has to be a fact rather than opinion. But it does not apply if there is a fiduciary relationship between the parties or there has been some trickery employee by the one making the representation, or where parties do not in general deal at arms length, or where the representee does not have equal opportunity to become appraised with the truth or falsity of the fact represented
iii. A statement of a party having superior knowledge may be regarded as a
ure omission: silence
i. Pure omissions are deceptive without expanding on the concept virtually beyond limits
ii. Commission does not treat pure omissions as deceptive
1. Could not declare pure omissions to be deceptive without expanding the concept beyond limits
2. Pure omissions do not presumptively or generally reflect a deliberate act on the party of the seller and there is no basis for concluding, without further analysis, that an order requiring corrective disclosure would necessarily engender positive net benefits to consumers or be of public interest
iii. A seller may have no way of knowing in advance what disclosure is important to a particular consumer
d. It is deceptive to tell only a half truth and omit the rest
i. May occur when seller fails to disclose qualifying information necessary to prevent one of his affirmative statements from creating a misleading impression
e. How many people need to be harmed before the seller is obligated to warn the consumer of the danger?
i. Look at how many people are using the item for reasons normal, intended, or expected
7. WARRANTIES
§2-314 Implied warranty of merchantabilityà If seller is a merchant with respect to goods of the kind, the product should not do anything other than what it is suppose to do. § (f) is the most important partà “are fit for the ordinary purposes for which such goods are used”. A toaster toasts. A tooth brush brushes your teeth, not cut your gums. (can be excluded or modified)
§2-315 Implied warranty of fit for particular purposeà Buyer buys something, asks seller for information about products bc seller has special skill or knowledge that buyer is relying on and seller has reason to know that buyer is relying on seller’s skill and knowledge=the goods purchased should be fit for their intended purpose. (remember AK’s example of the law school interviewee purchasing shoes for the interview)
i. The difference btwn merchantability and fit for particular purpose is there is reliance on the seller in fit for particular purpose.
§2-313 Express Warrantiesà when, through writing or verbally or by sample, the mnfg tells you that you are getting something (chainsaw with low kickback) and you make your purchase based on this statement, there is an express warranty that the goods will conform to the promise made. There can be a description of the good/promise/fact, a sample or model, whatever it is that you see or are told, the goods should conform to that.
§2-318 Third party beneficiaries of warrantyà (who can sue if you are not direct purchaser) The seller’s warranty, whether express or implied, extends to any natural person who is in the family, household or a guest in his home who uses or consumes the good and is injured. CANNOT BE EXCLUDED BY SELLER! Is diff in KS and MO.
