Rosner, Barry & Babbitt, LLP’s Auto Fraud Legal Center proudly announces another victory for California car buyers against dealerships trying to take away their legal rights. On October 24, 2011, the California Court of Appeal issued a published opinion in Sanchez v. Valencia Holding Company, LLC, 2011 WL 5027488, holding the arbitration clause used by car dealers and financial institutions hidden on the back of most California car purchase contracts is unconscionable and unenforceable. This decision enables potentially millions of Californians to pursue claims against car dealers and lenders in court, rather than through forced private arbitration. The decision also paves the way for class action lawsuits against dealers and lenders for their fraudulent practices which would have been barred in arbitration.

Gil Sanchez purchased a used 2006 Mercedes-Benz S500V from Mercedes Benz of Valencia in August 2008.  Mr. Sanchez alleges the dealership lied to him about paying to have the vehicle certified when, in fact, the $3,700 charge was for a service contract.  It is unclear whether the vehicle was actually a certified vehicle under Mercedes Benz’ Certified Pre-Owned Program.  When the dealership prepared Mr. Sanchez’s contract to purchase the vehicle, it listed a charge of $347 for license fees. and N/A. for registration, transfer, and titling fees, both of which were false.  The contract also included a $28 Optional DMV Electronic Filing Fee, but Valencia never discussed the fee with Mr. Sanchez or asked if he wanted to opt out of it. The contract also charged Mr. Sanchez California tire fees of $8.75, a new tire fee of $1.75 for each new tire, including the spare. However, not all of the tires on Mr. Sanchez’s vehicle were new and subject to the fee. Finally, the contract showed a down payment of $15,000 instead of the $10,000 down payment Mr. Sanchez actually made.

Mr. Sanchez’s lawsuit was filed in Los Angeles Superior Court on March 11, 2010, on behalf of four classes of consumers: (1) consumers with undisclosed deferred down payments; (2) consumers with improperly disclosed license and registration fees; (3)　consumers improperly charged the Optional DMV Electronic Filing Fee; and (4)　consumers improperly charged California Tire Fees.  Mercedes Benz of Valencia’s motion to compel arbitration was denied by the trial court on September 14, 2010.

The Sanchez decision represents Rosner, Barry & Babbitt’s second major victory against the arbitration clause car dealers hide on the back of vehicle purchase contracts.  In 2010, in Fisher v. DCH Temecula Imports LLC, (2010) 187 Cal.App.4th 601, Rosner, Barry & Babbitt successfully prevented the enforcement of the arbitration clause in class action lawsuits against car dealerships involving claims under the Consumers Legal Remedies Act.  Between the Fisher and Sanchez opinions, car buyers can now rest easy that if the dealership violated California law in their transaction, they will have their day in court.

For more information about this, or Rosner, Barry & Babbitt, LLP’s Auto Fraud Legal Center’s other class action lawsuits against car dealers and lenders in California, contact Hal Rosner or Hawk Barry at (800) 466-5366.