Amended in Assembly March 23, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 287

Introduced by Assembly Members Gordon, Eggman, and begin delete Mark Stone end delete begin insert Mark Stone end insert

(Principal coauthor: Assembly Member Wilk)

begin insert

(Coauthor: Assembly Member Jones)

end insert

February 11, 2015

begin delete An act relating to vehicles. end delete begin insert An act to amend Sections 3050, 3066, 4751, and 11713.3 of, to add Section 3065.2 to, and to add Article 1.1 (commencing with Section 11750) to Chapter 4 of Division 5 of, the Vehicle Code, relating to vehicle safety. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 287, as amended, Gordon. begin delete Vehicles: safety recalls. end delete begin insert Vehicle safety: recalls. end insert

begin insert

Existing law generally regulates the transfer and registration of motor vehicles. Existing federal law requires a motor vehicle manufacturer to notify the owner or purchaser of a motor vehicle when the manufacturer determines that the vehicle contains a safety-related defect or when the manufacturer is ordered by the federal Secretary of Transportation to notify vehicle owners and purchasers that a vehicle has a safety-related defect. Existing federal law also prohibits a motor vehicle dealer from selling a vehicle if it has been notified of a safety-related defect by the manufacturer, except as specified.

end insert begin insert

This bill would enact the Consumer Automotive Recall Safety Act, which would be operative on and after July 1, 2016. The act would require a vehicle manufacturer to display notifications of Stop Sale - Stop Drive recalls, as defined, on the manufacturer’s Internet Web site. The act would require a vehicle manufacturer to provide a rental or loaner car for a consumer who seeks to have a vehicle repaired because of a recall, and the parts or procedures are not yet available to perform the repair. The act would also require a vehicle manufacturer to compensate its franchisees, as specified, for costs incurred in providing a loaner or rental car and storing a consumer’s vehicle that is subject to recall if the parts or procedures are not yet available to perform the repair.

end insert begin insert

The act would prohibit a vehicle dealer from displaying or offering for sale at retail a used vehicle, unless the dealer has obtained a recall database report within 30 days of the display or offer. The act would prohibit a vehicle dealer from selling or leasing a vehicle at retail if the used vehicle that has a Stop Sale - Stop Drive recall until the recalled vehicle has been repaired, subject to exception. The act would prohibit a rental car company from offering a vehicle for rent unless the company has obtained a recall database report within 30 days of the offer. The act would prohibit a rental car company from renting a vehicle that has a Stop Sale - Stop Drive recall until the recalled vehicle has been repaired, subject to exception. By creating new prohibitions, the violation of which would be a crime under existing law, this bill would impose a state-mandated local program.

end insert begin insert

Existing law establishes the New Motor Vehicle Board in the Department of Motor Vehicles, and requires the board to hear and decide certain protests presented by a motor vehicle franchisee in regard to a dispute with the vehicle manufacturer.

end insert begin insert

This bill would, commencing July 1, 2016, authorize the board to hear and decide protests by franchisees regarding payments for providing a loaner or rental car and storing a consumer’s vehicle subject to recall if the parts or procedures are not yet available to perform the repair. The bill would make additional conforming changes.

end insert begin insert

Existing law prescribes certain instances when the Department of Motor Vehicles may refuse registration, or renewal or transfer of registration, of a vehicle, including, among others, if the applicant has failed to furnish the department with an odometer disclosure statement, as specified.

end insert begin insert

This bill would additionally authorize the department, commencing July 1, 2016, to refuse registration, or renewal or transfer of registration, of a vehicle if the applicant has failed to furnish the department with a recall disclosure statement, as defined.

end insert begin insert

Under existing law, a vehicle manufacturer, manufacturer branch, distributor, and distributor branch are prohibited from engaging in specified practices. Existing law makes a violation of these prohibitions a crime.

end insert begin insert

This bill would, commencing July 1, 2016, include within those prohibited practices, unfairly discriminating among franchisees with respect to reimbursement for costs incurred in providing a loaner or rental car and storing a consumer’s vehicle that is subject to recall if the parts or procedures are not yet available to perform the repair. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

end insert begin insert

The bill would state findings and declarations of the Legislature relative to vehicle recalls.

end insert begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

Existing law generally regulates the transfer and registration of motor vehicles. Existing federal law requires a motor vehicle manufacturer to notify the owner or purchaser of a motor vehicle when the manufacturer determines that the vehicle contains a safety-related defect or when the manufacturer is ordered by the federal Secretary of Transportation to notify vehicle owners and purchasers that a vehicle has a safety-related defect.

end delete begin delete

This bill would state the intent of the Legislature to enact the Consumer Automotive Recall Safety Act to provide comprehensive consumer protections that address the low recall repair completion rate and consumer confusion regarding automotive recalls in California.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

(a) The Legislature finds and declares all of the
following:

end insert begin insert

(1) Over the past one-half decade, automakers and the National
Highway Traffic Safety Administration have issued more recalls
on new and used motor vehicles than ever before. The year 2014
set the record for the most recalls on vehicles in United States
history with over 63.8 million vehicles recalled. The rate of vehicle
recalls has exponentially grown over this past one-half decade as
22 million recalls were issued in 2013 and 16.2 million were issued
in 2012. The increase of recalls in 2014 is a 190 percent increase
from 2013 and a 293.8 percent increase from 2012.

end insert begin insert

(2) While federal motor vehicle safety standards are more
demanding now than at any other point in time and new vehicles
sold today are the safest in history, the exponential growth of
recalls issued on motor vehicles has caused confusion and apathy
for far too many Californians. According to the National Highway
Traffic Safety Administration and others about one-third of all
recalled vehicles are never repaired by the vehicle’s owner.

end insert begin insert

(3) Federal regulations now require most vehicle manufacturers
to provide motor vehicle safety recall information applicable to
the vehicles they manufacture on the Internet and available to the
public. Dealers, rental car companies, and private parties offering
vehicles for sale or rent now have greater access to recall
information than ever before.

end insert begin insert

(4) Federal law imposes a requirement not to sell a new vehicle
subject to a recall, but neither federal nor California law addresses
used vehicles subject to a recall. It is the intent of this act to
address used vehicles subject to a recall that are not yet repaired.

end insert begin insert

(b) Accordingly, it is the intent of the Legislature in enacting
this act to increase consumer awareness of recalls in the car
purchasing and rental process, to ensure that consumers have
access to loaner and rental vehicles while their recalled vehicles
are being repaired at a new motor vehicle dealer, and to ensure
that a recalled vehicle that poses a risk of imminent harm is not
sold or rented to Californians until the risk is removed and the
vehicle is repaired.

end insert begin insert

(c) The Legislature further finds and declares all of the
following:

end insert begin insert

(1) The distribution, sale, and service of new motor vehicles in
the State of California vitally affects the general economy of this
state and the public welfare.

end insert begin insert

(2) The new motor vehicle franchise system, which operates
within a strictly defined and highly regulated statutory scheme,
assures the consuming public of a well-organized distribution
system for the availability and sale of new motor vehicles
throughout the state, provides a network of quality warranty, recall,
and repair facilities to maintain those vehicles, and creates a
cost-effective method for the state to police those systems through
the licensing and regulation of private sector franchisors and
franchisees.

end insert begin insert

(3) Franchisors sometimes establish programs to reimburse
franchisees for loaner or rental cars given to consumers whose
vehicles have been recalled, but California franchise laws fail to
establish guidelines for rental or loaner vehicle reimbursement.

end insert begin insert

(4) California franchise laws require manufacturers to provide
reasonable reimbursement to dealers for warranty and recall work,
but fails to establish guidelines for compensating franchisee costs
associated with recalled vehicles that cannot be repaired and
remain in the franchisee’s possession.

end insert begin insert

(d) Accordingly, it is the intent of the Legislature in enacting
this act to ensure that new motor vehicle dealer franchisees are
treated fairly by their franchisors, that new motor vehicle dealer
franchisees are reasonably reimbursed for providing loaner or
rental vehicles to consumers who have recalled vehicles when the
parts or procedures to make the recall repair are not available,
and that new motor vehicle dealer franchisees are reasonably
compensated for recalled vehicles at their dealerships that cannot
immediately be repaired and must be stored by the franchisee at
the dealership.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 3050 of the end insert begin insert Vehicle Code end insert begin insert is amended to read: end insert

3050.  

The board shall do all of the following:

(a) Adopt rules and regulations in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code governing those matters that are
specifically committed to its jurisdiction.

(b) Hear and determine, within the limitations and in accordance
with the procedure provided, an appeal presented by an applicant
for, or holder of, a license as a new motor vehicle dealer,
manufacturer, manufacturer branch, distributor, distributor branch,
or representative when the applicant or licensee submits an appeal
provided for in this chapter from a decision arising out of the
department.

(c) Consider any matter concerning the activities or practices
of any person applying for or holding a license as a new motor
vehicle dealer, manufacturer, manufacturer branch, distributor,
distributor branch, or representative pursuant to Chapter 4
(commencing with Section 11700) of Division 5 submitted by any
person. A member of the board who is a new motor vehicle dealer
may not participate in, hear, comment, advise other members upon,
or decide any matter considered by the board pursuant to this
subdivision that involves a dispute between a franchisee and
franchisor. After that consideration, the board may do any one or
any combination of the following:

(1) Direct the department to conduct investigation of matters
that the board deems reasonable, and make a written report on the
results of the investigation to the board within the time specified
by the board.

(2) Undertake to mediate, arbitrate, or otherwise resolve any
honest difference of opinion or viewpoint existing between any
member of the public and any new motor vehicle dealer,
manufacturer, manufacturer branch, distributor, distributor branch,
or representative.

(3) Order the department to exercise any and all authority or
power that the department may have with respect to the issuance,
renewal, refusal to renew, suspension, or revocation of the license
of any new motor vehicle dealer, manufacturer, manufacturer
branch, distributor, distributor branch, or representative as that
license is required under Chapter 4 (commencing with Section
11700) of Division 5.

(d) Hear and decide, within the limitations and in accordance
with the procedure provided, a protest presented by a franchisee
pursuant to Section 3060, 3062, 3064, 3065, 3065.1, begin insert 3065.2, end insert 3070,
3072, 3074, 3075, or 3076. A member of the board who is a new
motor vehicle dealer may not participate in, hear, comment, advise
other members upon, or decide, any matter involving a protest
filed pursuant to Article 4 (commencing with Section 3060), unless
all parties to the protest stipulate otherwise.

(e) Notwithstanding subdivisions (c) and (d), the courts have
jurisdiction over all common law and statutory claims originally
cognizable in the courts. For those claims, a party may initiate an
action directly in any court of competent jurisdiction.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 3065.2 is added to the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

begin insert

begin insert 3065.2. end insert   

(a) A claim made by a franchisee for payment under
Section 11760 shall be either approved or disapproved within 30
days after receipt by the franchisor. When a claim is disapproved,
the franchisee who submits it shall be notified in writing of its
disapproval within the required period, and each notice shall state
the specific grounds upon which the disapproval is based. Any
claim not specifically disapproved in writing within 30 days from
receipt shall be deemed approved on the 30th day.

(b) Franchisee claims for compensation under Section 11760
shall not be disapproved unless the claim is false or fraudulent,
the claim is ineligible under the statute, or for material
noncompliance with reasonable and nondiscriminatory
requirements of the franchisor, including documentation and
administrative claims submission requirements.

(c) The franchisor shall provide a reasonable appeal process
allowing the franchisee at least 30 days after receipt of the written
disapproval notice to respond to any disapproval with additional
supporting documentation or information rebutting the
disapproval. If disapproval is based upon noncompliance with
documentation or administrative claims submission requirements,
the franchisor shall allow the franchisee at least 30 days from the
date of receipt of the written disapproval notice to cure any
material noncompliance. If the disapproval is rebutted, and
material noncompliance is cured before the applicable deadline,
the franchisor shall approve the claim.

(d) If the franchisee provides additional supporting
documentation or information purporting to rebut the disapproval,
attempts to cure noncompliance relating to the claim, or otherwise
appeals denial of the claim, and the franchisor continues to deny
the claim, the franchisor shall provide the franchisee with a written
notification of the final denial within 30 days of completion of the
appeal process, which shall conspicuously state “Final Denial”
on the first page.

(e) Following the disapproval of a claim, a franchisee shall
have six months from receipt of the written notice described in
either subdivision (a) or (d), whichever is later, to file a protest
with the board for determination of whether the franchisor
complied with subdivisions (a), (b), (c), and (d). In any hearing
pursuant to this subdivision or subdivision (a), (b), (c), or (d), the
franchisor shall have the burden of proof.

(f) A claim made by franchisees under this section shall be paid
within 30 days following approval. Failure to approve or pay
within the time limits specified in this section, in individual
instances for reasons beyond the reasonable control of the
franchisor, is not a violation of this section.

(g) (1) Audits of franchisee records for payment under Section
11760 may be conducted by the franchisor on a reasonable basis,
and for a period of nine months after a claim is paid or credit
issued. A franchisor shall not select a franchisee for an audit, or
perform an audit, in a punitive, retaliatory, or unfairly
discriminatory manner. A franchisor may conduct no more than
one random audit of a franchisee in a nine-month period. The
franchisor’s notification to the franchisee of any additional audit
within a nine-month period shall be accompanied by written
disclosure of the basis for that additional audit.

(2) Previously approved claims shall not be disapproved and
charged back unless the claim is false or fraudulent, the claim is
ineligible under the statute, or for material noncompliance with
reasonable and nondiscriminatory requirements of the franchisor,
including documentation and administrative claims submission
requirements. A franchisor shall not disapprove a claim or
chargeback a claim based upon an extrapolation from a sample
of claims, unless the sample of claims is selected randomly and
the extrapolation is performed in a reasonable and statistically
valid manner.

(3) If the franchisor disapproves of a previously approved claim
following an audit, the franchisor shall provide to the franchisee,
within 30 days after the audit, a written disapproval notice stating
the specific grounds upon which the claim is disapproved. The
franchisor shall provide a reasonable appeal process allowing
the franchisee a reasonable period of not less than 30 days after
receipt of the written disapproval notice to respond to any
disapproval with additional supporting documentation or
information rebutting the disapproval and to cure any material
noncompliance, with the period to be commensurate with the
volume of claims under consideration. If the franchisee rebuts any
disapproval and cures any material noncompliance relating to a
claim before the applicable deadline, the franchisor shall not
chargeback the franchisee for that claim.

(4) If the franchisee provides additional supporting
documentation or information purporting to rebut the disapproval,
attempts to cure noncompliance relating to the claim, or otherwise
appeals denial of the claim, and the franchisor continues to deny
the claim, the franchisor shall provide the franchisee with a written
notification of the final denial within 30 days of completion of the
appeal process, which shall conspicuously state “Final Denial”
on the first page.

(5) The franchisor shall not chargeback the franchisee until 45
days after the franchisee receives the written notice described in
paragraph (3) or (4), whichever is later. If the franchisee cures
any material noncompliance relating to a claim, the franchisor
shall not chargeback the dealer for that claim. Any chargeback to
a franchisee for under Section 11760 shall be made within 90 days
after the franchisee receives that written notice. If the board
sustains the chargeback or the protest is dismissed, the franchisor
shall have 90 days following issuance of the final order or the
dismissal to make the chargeback, unless otherwise provided in a
settlement agreement.

(6) Within six months after receipt of the written notice described
in either paragraph (3) or (4), a franchisee may file a protest with
the board for determination of whether the franchisor complied
with this subdivision. If the franchisee files a protest pursuant to
this subdivision prior to the franchisor’s chargeback for denied
claims, the franchisor shall not offset or otherwise undertake to
collect the chargeback until the board issues a final order on the
protest. In any protest pursuant to this subdivision, the franchisor
shall have the burden of proof.

(h) If a false claim was submitted by a franchisee with the intent
to defraud the franchisor, a longer period for audit and any
resulting chargeback may be permitted if the franchisor obtains
an order from the board.

(i) This section shall become operative on July 1, 2016.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 3066 of the end insert begin insert Vehicle Code end insert begin insert is amended to read: end insert

3066.  

(a) Upon receiving a protest pursuant to Section 3060,
3062, 3064, 3065, 3065.1, begin insert 3065.2, end insert 3070, 3072, 3074, 3075, or
3076, the board shall fix a time within 60 days of the order, and
place of hearing, and shall send by registered mail a copy of the
order to the franchisor, the protesting franchisee, and all individuals
and groups that have requested notification by the board of protests
and decisions of the board. Except in a case involving a franchisee
who deals exclusively in motorcycles, the board or its executive
director may, upon a showing of good cause, accelerate or postpone
the date initially established for a hearing, but the hearing may not
be rescheduled more than 90 days after the board’s initial order.
For the purpose of accelerating or postponing a hearing date, “good
cause” includes, but is not limited to, the effects upon, and any
irreparable harm to, the parties or interested persons or groups if
the request for a change in hearing date is not granted. The board
or an administrative law judge designated by the board shall hear
and consider the oral and documented evidence introduced by the
parties and other interested individuals and groups, and the board
shall make its decision solely on the record so made. Chapter 4.5
(commencing with Section 11400) of Part 1 of Division 3 of Title
2 of the Government Code and Sections 11507.3, 11507.6, 11507.7,
11511, 11511.5, 11513, 11514, 11515, and 11517 of the
Government Code apply to these proceedings.

(b) In a hearing on a protest filed pursuant to Section 3060,
3062, 3070, or 3072, the franchisor shall have the burden of proof
to establish that there is good cause to modify, replace, terminate,
or refuse to continue a franchise. The franchisee shall have the
burden of proof to establish that there is good cause not to enter
into a franchise establishing or relocating an additional motor
vehicle dealership.

(c) Except as otherwise provided in this chapter, in a hearing
on a protest alleging a violation of, or filed pursuant to, Section
3064, 3065, 3065.1, begin insert 3065.2, end insert 3074, 3075, or 3076, the franchisee
shall have the burden of proof, but the franchisor has the burden
of proof to establish that a franchisee acted with intent to defraud
the franchisor begin delete where end delete begin insert when end insert that issue is material to a protest filed
pursuant to Section 3065, 3065.1, begin insert 3065.2, end insert 3075, or 3076.

(d) A member of the board who is a new motor vehicle dealer
may not participate in, hear, comment, or advise other members
upon, or decide, a matter involving a protest filed pursuant to this
article unless all parties to the protest stipulate otherwise.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 4751 of the end insert begin insert Vehicle Code end insert begin insert is amended to read: end insert

4751.  

The department may refuse begin delete registration end delete begin insert registration, end insert or
the renewal or transfer of begin delete registration end delete begin insert registration, end insert of a vehicle in
any of the following events:

(a) If the department is not satisfied that the applicant is entitled
thereto under this code.

(b) If the applicant has failed to furnish the department with
information required in the application or reasonable additional
information required by the department.

(c) If the department determines that the applicant has made or
permitted unlawful use of any registration certificate, certificate
of ownership, or license plates.

(d) If the vehicle is mechanically unfit or unsafe to be operated
or moved on the highways.

(e) If the department determines that a manufacturer or dealer
has failed during the current or previous year to comply with the
provisions of this code relating to the giving of notice to the
department of the transfer of a vehicle during the current or
previous year.

(f) If the department determines that a lien exists, pursuant to
Section 9800, against one or more other vehicles in which the
applicant has an ownership interest.

(g) If the applicant has failed to furnish the department with an
odometer disclosure statement pursuant to subsection (a) of Section
32705 of Title 49 of the United States Code.

begin insert

(h) Commencing July 1, 2016, if the applicant has failed to
furnish the department with a recall disclosure statement pursuant
to Section 11758.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 11713.3 of the end insert begin insert Vehicle Code end insert begin insert is amended to
read: end insert

11713.3.  

It is unlawful and a violation of this code for a
manufacturer, manufacturer branch, distributor, or distributor
branch licensed pursuant to this code to do, directly or indirectly
through an affiliate, any of the following:

(a) To refuse or fail to deliver in reasonable quantities and within
a reasonable time after receipt of an order from a dealer having a
franchise for the retail sale of a new vehicle sold or distributed by
the manufacturer or distributor, a new vehicle or parts or
accessories to new vehicles as are covered by the franchise, if the
vehicle, parts, or accessories are publicly advertised as being
available for delivery or actually being delivered. This subdivision
is not violated, however, if the failure is caused by acts or causes
beyond the control of the manufacturer, manufacturer branch,
distributor, or distributor branch.

(b) To prevent or require, or attempt to prevent or require, by
contract or otherwise, a change in the capital structure of a
dealership or the means by or through which the dealer finances
the operation of the dealership, if the dealer at all times meets
reasonable capital standards agreed to by the dealer and the
manufacturer or distributor, and if a change in capital structure
does not cause a change in the principal management or have the
effect of a sale of the franchise without the consent of the
manufacturer or distributor.

(c) To prevent or require, or attempt to prevent or require, a
dealer to change the executive management of a dealership, other
than the principal dealership operator or operators, if the franchise
was granted to the dealer in reliance upon the personal
qualifications of that person.

(d) (1) Except as provided in subdivision (t), to prevent or
require, or attempt to prevent or require, by contract or otherwise,
a dealer, or an officer, partner, or stockholder of a dealership, the
sale or transfer of a part of the interest of any of them to another
person. A dealer, officer, partner, or stockholder shall not, however,
have the right to sell, transfer, or assign the franchise, or a right
thereunder, without the consent of the manufacturer or distributor
except that the consent shall not be unreasonably withheld.

(2) (A) For the transferring franchisee to fail, prior to the sale,
transfer, or assignment of a franchisee or the sale, assignment, or
transfer of all, or substantially all, of the assets of the franchised
business or a controlling interest in the franchised business to
another person, to notify the manufacturer or distributor of the
franchisee’s decision to sell, transfer, or assign the franchise. The
notice shall be in writing and shall include all of the following:

(i) The proposed transferee’s name and address.

(ii) A copy of all of the agreements relating to the sale,
assignment, or transfer of the franchised business or its assets.

(iii) The proposed transferee’s application for approval to
become the successor franchisee. The application shall include
forms and related information generally utilized by the
manufacturer or distributor in reviewing prospective franchisees,
if those forms are readily made available to existing franchisees.
As soon as practicable after receipt of the proposed transferee’s
application, the manufacturer or distributor shall notify the
franchisee and the proposed transferee of information needed to
make the application complete.

(B) For the manufacturer or distributor, to fail, on or before 60
days after the receipt of all of the information required pursuant
to subparagraph (A), or as extended by a written agreement
between the manufacturer or distributor and the franchisee, to
notify the franchisee of the approval or the disapproval of the sale,
transfer, or assignment of the franchise. The notice shall be in
writing and shall be personally served or sent by certified mail,
return receipt requested, or by guaranteed overnight delivery
service that provides verification of delivery and shall be directed
to the franchisee. A proposed sale, assignment, or transfer shall
be deemed approved, unless disapproved by the franchisor in the
manner provided by this subdivision. If the proposed sale,
assignment, or transfer is disapproved, the franchisor shall include
in the notice of disapproval a statement setting forth the reasons
for the disapproval.

(3) In an action in which the manufacturer’s or distributor’s
withholding of consent under this subdivision or subdivision (e)
is an issue, whether the withholding of consent was unreasonable
is a question of fact requiring consideration of all the existing
circumstances.

(e) To prevent, or attempt to prevent, a dealer from receiving
fair and reasonable compensation for the value of the franchised
business. There shall not be a transfer or assignment of the dealer’s
franchise without the consent of the manufacturer or distributor,
which consent shall not be unreasonably withheld or conditioned
upon the release, assignment, novation, waiver, estoppel, or
modification of a claim or defense by the dealer.

(f) To obtain money, goods, services, or another benefit from
a person with whom the dealer does business, on account of, or in
relation to, the transaction between the dealer and that other person,
other than for compensation for services rendered, unless the
benefit is promptly accounted for, and transmitted to, the dealer.

(g) (1) Except as provided in paragraph (3), to obtain from a
dealer or enforce against a dealer an agreement, provision, release,
assignment, novation, waiver, or estoppel that does any of the
following:

(A) Modifies or disclaims a duty or obligation of a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative, or a right or privilege of a dealer, pursuant to
Chapter 4 (commencing with Section 11700) of Division 5 or
Chapter 6 (commencing with Section 3000) of Division 2.

(B) Limits or constrains the right of a dealer to file, pursue, or
submit evidence in connection with a protest before the board.

(C) Requires a dealer to terminate a franchise.

(D) Requires a controversy between a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative and a dealer to be referred to a person for a binding
determination. However, this subparagraph does not prohibit
arbitration before an independent arbitrator, provided that whenever
a motor vehicle franchise contract provides for the use of arbitration
to resolve a controversy arising out of, or relating to, that contract,
arbitration may be used to settle the controversy only if, after the
controversy arises, all parties to the controversy consent in writing
to use arbitration to settle the controversy. For the purpose of this
subparagraph, the terms “motor vehicle” and “motor vehicle
franchise contract” shall have the same meaning as defined in
Section 1226 of Title 15 of the United States Code. If arbitration
is elected to settle a dispute under a motor vehicle franchise
contract, the arbitrator shall provide the parties to the arbitration
with a written explanation of the factual and legal basis for the
award.

(2) An agreement, provision, release, assignment, novation,
waiver, or estoppel prohibited by this subdivision shall be
unenforceable and void.

(3) This subdivision does not do any of the following:

(A) Limit or restrict the terms upon which parties to a protest
before the board, civil action, or other proceeding can settle or
resolve, or stipulate to evidentiary or procedural matters during
the course of, a protest, civil action, or other proceeding.

(B) Affect the enforceability of any stipulated order or other
order entered by the board.

(C) Affect the enforceability of any provision in a contract if
the provision is not prohibited under this subdivision or any other
law.

(D) Affect the enforceability of a provision in any contract
entered into on or before December 31, 2011.

(E) Prohibit a dealer from waiving its right to file a protest
pursuant to Section 3065.1 if the waiver agreement is entered into
after a franchisor incentive program claim has been disapproved
by the franchisor and the waiver is voluntarily given as part of an
agreement to settle that claim.

(F) Prohibit a voluntary agreement supported by valuable
consideration, other than granting or renewing a franchise, that
does both of the following:

(i) Provides that a dealer establish or maintain exclusive
facilities, personnel, or display space or provides that a dealer
make a material alteration, expansion, or addition to a dealership
facility.

(ii) Contains no waiver or other provision prohibited by
subparagraph (A), (B), (C), or (D) of paragraph (1).

(G) Prohibit an agreement separate from the franchise agreement
that implements a dealer’s election to terminate the franchise if
the agreement is conditioned only on a specified time for
termination or payment of consideration to the dealer.

(H) (i) Prohibit a voluntary waiver agreement, supported by
valuable consideration, other than the consideration of renewing
a franchise, to waive the right of a dealer to file a protest under
Section 3062 for the proposed establishment or relocation of a
specific proposed dealership, if the waiver agreement provides all
of the following:

(I) The approximate address at which the proposed dealership
will be located.

(II) The planning potential used to establish the proposed
dealership’s facility, personnel, and capital requirements.

(III) An approximation of projected vehicle and parts sales, and
number of vehicles to be serviced at the proposed dealership.

(IV) Whether the franchisor or affiliate will hold an ownership
interest in the proposed dealership or real property of the proposed
dealership, and the approximate percentage of any franchisor or
affiliate ownership interest in the proposed dealership.

(V) The line-makes to be operated at the proposed dealership.

(VI) If known at the time the waiver agreement is executed, the
identity of the dealer who will operate the proposed dealership.

(VII) The date the waiver agreement is to expire, which may
not be more than 30 months after the date of execution of the
waiver agreement.

(ii) Notwithstanding the provisions of a waiver agreement
entered into pursuant to the provisions of this subparagraph, a
dealer may file a protest under Section 3062 if any of the
information provided pursuant to clause (i) has become materially
inaccurate since the waiver agreement was executed. Any
determination of the enforceability of a waiver agreement shall be
determined by the board and the franchisor shall have the burden
of proof.

(h) To increase prices of motor vehicles that the dealer had
ordered for private retail consumers prior to the dealer’s receipt
of the written official price increase notification. A sales contract
signed by a private retail consumer is evidence of the order. In the
event of manufacturer price reductions, the amount of the reduction
received by a dealer shall be passed on to the private retail
consumer by the dealer if the retail price was negotiated on the
basis of the previous higher price to the dealer. Price reductions
apply to all vehicles in the dealer’s inventory that were subject to
the price reduction. Price differences applicable to new model or
series motor vehicles at the time of the introduction of new models
or series shall not be considered a price increase or price decrease.
This subdivision does not apply to price changes caused by either
of the following:

(1) The addition to a motor vehicle of required or optional
equipment pursuant to state or federal law.

(2) Revaluation of the United States dollar in the case of a
foreign-make vehicle.

(i) To fail to pay to a dealer, within a reasonable time following
receipt of a valid claim by a dealer thereof, a payment agreed to
be made by the manufacturer or distributor to the dealer by reason
of the fact that a new vehicle of a prior year model is in the dealer’s
inventory at the time of introduction of new model vehicles.

(j) To deny the widow, widower, or heirs designated by a
deceased owner of a dealership the opportunity to participate in
the ownership of the dealership or successor dealership under a
valid franchise for a reasonable time after the death of the owner.

(k) To offer refunds or other types of inducements to a person
for the purchase of new motor vehicles of a certain line-make to
be sold to the state or a political subdivision of the state without
making the same offer to all other dealers in the same line-make
within the relevant market area.

(l) To modify, replace, enter into, relocate, terminate, or refuse
to renew a franchise in violation of Article 4 (commencing with
Section 3060) of Chapter 6 of Division 2.

(m) To employ a person as a representative who has not been
licensed pursuant to Article 3 (commencing with Section 11900)
of Chapter 4 of Division 5.

(n) To deny a dealer the right of free association with another
dealer for a lawful purpose.

(o) (1) To compete with a dealer in the same line-make
operating under an agreement or franchise from a manufacturer
or distributor in the relevant market area.

(2) A manufacturer, branch, or distributor or an entity that
controls or is controlled by, a manufacturer, branch, or distributor,
shall not, however, be deemed to be competing in the following
limited circumstances:

(A) Owning or operating a dealership for a temporary period,
not to exceed one year at the location of a former dealership of the
same line-make that has been out of operation for less than six
months. However, after a showing of good cause by a
manufacturer, branch, or distributor that it needs additional time
to operate a dealership in preparation for sale to a successor
independent franchisee, the board may extend the time period.

(B) Owning an interest in a dealer as part of a bona fide dealer
development program that satisfies all of the following
requirements:

(i) The sole purpose of the program is to make franchises
available to persons lacking capital, training, business experience,
or other qualities ordinarily required of prospective franchisees
and the dealer development candidate is an individual who is
unable to acquire the franchise without assistance of the program.

(ii) The dealer development candidate has made a significant
investment subject to loss in the franchised business of the dealer.

(iii) The program requires the dealer development candidate to
manage the day-to-day operations and business affairs of the dealer
and to acquire, within a reasonable time and on reasonable terms
and conditions, beneficial ownership and control of a majority
interest in the dealer and disassociation of any direct or indirect
ownership or control by the manufacturer, branch, or distributor.

(C) Owning a wholly owned subsidiary corporation of a
distributor that sells motor vehicles at retail, if, for at least three
years prior to January 1, 1973, the subsidiary corporation has been
a wholly owned subsidiary of the distributor and engaged in the
sale of vehicles at retail.

(3) (A) A manufacturer, branch, and distributor that owns or
operates a dealership in the manner described in subparagraph (A)
of paragraph (2) shall give written notice to the board, within 10
days, each time it commences or terminates operation of a
dealership and each time it acquires, changes, or divests itself of
an ownership interest.

(B) A manufacturer, branch, and distributor that owns an interest
in a dealer in the manner described in subparagraph (B) of
paragraph (2) shall give written notice to the board, annually, of
the name and location of each dealer in which it has an ownership
interest, the name of the bona fide dealer development owner or
owners, and the ownership interests of each owner expressed as a
percentage.

(p) To unfairly discriminate among its franchisees with respect
to warranty reimbursement or authority granted to its franchisees
to make warranty adjustments with retail customers.

(q) To sell vehicles to a person not licensed pursuant to this
chapter for resale.

(r) To fail to affix an identification number to a park trailer, as
described in Section 18009.3 of the Health and Safety Code, that
is manufactured on or after January 1, 1987, and that does not
clearly identify the unit as a park trailer to the department. The
configuration of the identification number shall be approved by
the department.

(s) To dishonor a warranty, rebate, or other incentive offered
to the public or a dealer in connection with the retail sale of a new
motor vehicle, based solely upon the fact that an autobroker
arranged or negotiated the sale. This subdivision shall not prohibit
the disallowance of that rebate or incentive if the purchaser or
dealer is ineligible to receive the rebate or incentive pursuant to
any other term or condition of a rebate or incentive program.

(t) To exercise a right of first refusal or other right requiring a
franchisee or an owner of the franchise to sell, transfer, or assign
to the franchisor, or to a nominee of the franchisor, all or a material
part of the franchised business or of the assets of the franchised
business unless all of the following requirements are met:

(1) The franchise authorizes the franchisor to exercise a right
of first refusal to acquire the franchised business or assets of the
franchised business in the event of a proposed sale, transfer, or
assignment.

(2) The franchisor gives written notice of its exercise of the
right of first refusal no later than 45 days after the franchisor
receives all of the information required pursuant to subparagraph
(A) of paragraph (2) of subdivision (d).

(3) The sale, transfer, or assignment being proposed relates to
not less than all or substantially all of the assets of the franchised
business or to a controlling interest in the franchised business.

(4) The proposed transferee is neither a family member of an
owner of the franchised business, nor a managerial employee of
the franchisee owning 15 percent or more of the franchised
business, nor a corporation, partnership, or other legal entity owned
by the existing owners of the franchised business. For purposes of
this paragraph, a “family member” means the spouse of an owner
of the franchised business, the child, grandchild, brother, sister,
or parent of an owner, or a spouse of one of those family members.
This paragraph does not limit the rights of the franchisor to
disapprove a proposed transferee as provided in subdivision (d).

(5) Upon the franchisor’s exercise of the right of first refusal,
the consideration paid by the franchisor to the franchisee and
owners of the franchised business shall equal or exceed all
consideration that each of them were to have received under the
terms of, or in connection with, the proposed sale, assignment, or
transfer, and the franchisor shall comply with all the terms and
conditions of the agreement or agreements to sell, transfer, or
assign the franchised business.

(6) The franchisor shall reimburse the proposed transferee for
expenses paid or incurred by the proposed transferee in evaluating,
investigating, and negotiating the proposed transfer to the extent
those expenses do not exceed the usual, customary, and reasonable
fees charged for similar work done in the area in which the
franchised business is located. These expenses include, but are not
limited to, legal and accounting expenses, and expenses incurred
for title reports and environmental or other investigations of real
property on which the franchisee’s operations are conducted. The
proposed transferee shall provide the franchisor a written
itemization of those expenses, and a copy of all nonprivileged
reports and studies for which expenses were incurred, if any, within
30 days of the proposed transferee’s receipt of a written request
from the franchisor for that accounting. The franchisor shall make
payment within 30 days of exercising the right of first refusal.

(u) (1) To unfairly discriminate in favor of a dealership owned
or controlled, in whole or in part, by a manufacturer or distributor
or an entity that controls or is controlled by the manufacturer or
distributor. Unfair discrimination includes, but is not limited to,
the following:

(A) The furnishing to a franchisee or dealer that is owned or
controlled, in whole or in part, by a manufacturer, branch, or
distributor of any of the following:

(i) A vehicle that is not made available to each franchisee
pursuant to a reasonable allocation formula that is applied
uniformly, and a part or accessory that is not made available to all
franchisees on an equal basis when there is no reasonable allocation
formula that is applied uniformly.

(ii) A vehicle, part, or accessory that is not made available to
each franchisee on comparable delivery terms, including the time
of delivery after the placement of an order. Differences in delivery
terms due to geographic distances or other factors beyond the
control of the manufacturer, branch, or distributor shall not
constitute unfair competition.

(iii) Information obtained from a franchisee by the manufacturer,
branch, or distributor concerning the business affairs or operations
of a franchisee in which the manufacturer, branch, or distributor
does not have an ownership interest. The information includes,
but is not limited to, information contained in financial statements
and operating reports, the name, address, or other personal
information or buying, leasing, or service behavior of a dealer
customer, and other information that, if provided to a franchisee
or dealer owned or controlled by a manufacturer or distributor,
would give that franchisee or dealer a competitive advantage. This
clause does not apply if the information is provided pursuant to a
subpoena or court order, or to aggregated information made
available to all franchisees.

(iv) Sales or service incentives, discounts, or promotional
programs that are not made available to all California franchises
of the same line-make on an equal basis.

(B) Referring a prospective purchaser or lessee to a dealer in
which a manufacturer, branch, or distributor has an ownership
interest, unless the prospective purchaser or lessee resides in the
area of responsibility assigned to that dealer or the prospective
purchaser or lessee requests to be referred to that dealer. begin insert For
purposes of this subparagraph, the term “area of responsibility”
means a geographic area specified in a franchise that is used by
the franchisor for the purpose of evaluating the franchisee’s
performance of its sales and service obligations. end insert

(2) This subdivision does not prohibit a franchisor from granting
a franchise to prospective franchisees or assisting those franchisees
during the course of the franchise relationship as part of a program
or programs to make franchises available to persons lacking capital,
training, business experience, or other qualifications ordinarily
required of prospective franchisees.

(v) (1) To access, modify, or extract information from a
confidential dealer computer record, as defined in Section
11713.25, without obtaining the prior written consent of the dealer
and without maintaining administrative, technical, and physical
safeguards to protect the security, confidentiality, and integrity of
the information.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(w) (1) To use electronic, contractual, or other means to prevent
or interfere with any of the following:

(A) The lawful efforts of a dealer to comply with federal and
state data security and privacy laws.

(B) The ability of a dealer to do either of the following:

(i) Ensure that specific data accessed from the dealer’s computer
system is within the scope of consent specified in subdivision (v).

(ii) Monitor specific data accessed from or written to the dealer’s
computer system.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(x) (1) To unfairly discriminate against a franchisee selling a
service contract, debt cancellation agreement, maintenance
agreement, or similar product not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate. For purposes of this subdivision,
unfair discrimination includes, but is not limited to, any of the
following:

(A) Express or implied statements that the dealer is under an
obligation to exclusively sell or offer to sell service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(B) Express or implied statements that selling or offering to sell
service contracts, debt cancellation agreements, maintenance
agreements, or similar products not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate, or the failure to sell or offer to
sell service contracts, debt cancellation agreements, maintenance
agreements, or similar products approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate will have any negative
consequences for the dealer.

(C) Measuring a dealer’s performance under a franchise
agreement based upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(D) Requiring a dealer to actively promote the sale of service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate.

(E) Conditioning access to vehicles or parts, or vehicle sales or
service incentives upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(2) Unfair discrimination does not include, and nothing shall
prohibit a manufacturer from, offering an incentive program to
vehicle dealers who voluntarily sell or offer to sell service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate,
if the program does not provide vehicle sales or service incentives.

(3) This subdivision does not prohibit a manufacturer,
manufacturer branch, distributor, or distributor branch from
requiring a franchisee that sells a used vehicle as “certified” under
a certified used vehicle program established by the manufacturer,
manufacturer branch, distributor, or distributor branch to provide
a service contract approved, endorsed, sponsored, or offered by
the manufacturer, manufacturer branch, distributor, or distributor
branch.

(4) Unfair discrimination does not include, and nothing shall
prohibit a franchisor from requiring a franchisee to provide, the
following notice prior to the sale of the service contract if the
service contract is not provided or backed by the franchisor and
the vehicle is of the franchised line-make:

“Service Contract Disclosure
The service contract you are purchasing is not provided or backed
by the manufacturer of the vehicle you are purchasing. The
manufacturer of the vehicle is not responsible for claims or repairs
under this service contract.
_____________________
Signature of Purchaser”

(y) To take or threaten to take any adverse action against a dealer
pursuant to an export or sale-for-resale prohibition because the
dealer sold or leased a vehicle to a customer who either exported
the vehicle to a foreign country or resold the vehicle in violation
of the prohibition, unless the export or sale-for-resale prohibition
policy was provided to the dealer in writing prior to the sale or
lease, and the dealer knew or reasonably should have known of
the customer’s intent to export or resell the vehicle in violation of
the prohibition at the time of sale or lease. If the dealer causes the
vehicle to be registered in this or any other state, and collects or
causes to be collected any applicable sales or use tax due to this
state, a rebuttable presumption is established that the dealer did
not have reason to know of the customer’s intent to export or resell
the vehicle.

begin delete

(z)  As used in this section, “area of responsibility” is a
geographic area specified in a franchise that is used by the
franchisor for the purpose of evaluating the franchisee’s
performance of its sales and service obligations.

end delete

begin insert (z) end insert begin insert   end insert begin insert Commencing July 1, 2016, to unfairly discriminate among
its franchisees with respect to reimbursement or authority granted
to its franchisees pursuant to subdivision (c) or (d) of Section
11760. end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Article 1.1 (commencing with Section 11750) is added
to Chapter 4 of Division 5 of the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 1.1. end insert   Consumer Automotive Recall Safety Act

 

begin insert 11750. end insert   

This chapter shall be known, and may be cited, as the
Consumer Automotive Recall Safety Act (CARS Act).

begin insert 11752. end insert   

As used in this chapter, the following definitions apply:

(a) The term “dealer” has the same meaning as in Section 285.

(b) (1) A “manufacturer’s recall” is a recall conducted
pursuant to Sections 30118 to 30120, inclusive, of Title 49 of the
United States Code, the National Highway Traffic and Motor
Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.).

(2) A manufacturer’s recall does not include a service campaign
or emission recall when the vehicle manufacturer or the National
Highway Traffic Safety Administration has not issued a recall
notice to owners of affected vehicles, pursuant to Section 30118
of Title 49 of the United States Code, the National Highway Traffic
and Motor Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.). A
manufacturer’s recall does not include a Stop Sale - Stop Drive
recall.

(c) The term “new motor vehicle dealer” has the same meaning
as in Section 426.

(d) A “recall database” is a database from which an individual
may obtain vehicle identification number (VIN) specific Stop Sale
- Stop Drive recall and manufacturer’s recall information relevant
to a specific vehicle.

(1) For a vehicle manufacturer that is not subject to the
regulations adopted pursuant to Section 31301 of the federal
Moving Ahead for Progress in the 21st Century Act (Public Law
112-141), a recall database is one of the following:

(A) The recall data on a vehicle manufacturer’s Internet Web
site for a specific vehicle’s line make.

(B) The recall data in a vehicle manufacturer’s internal system
that provides information to its franchisees on vehicles subject to
recall.

(C) The recall data in subparagraph (A) or (B) that is contained
in a commercially available vehicle history system.

(2) For a vehicle manufacturer that is subject to the regulations
adopted pursuant to Section 31301 of the federal Moving Ahead
for Progress in the 21st Century Act (Public Law 112-141), a recall
database shall include, at a minimum, the recall information
required pursuant to Section 573.15 of Title 49 of the Code of
Federal Regulations.

(e) A “recall database report” is a report, specific to a vehicle
that is identified by its VIN, containing information obtained from
a recall database.

(f) A “rental car company” is a person or entity in the business
of renting passenger vehicles to the public in California.

(g) A “Stop Sale - Stop Drive recall” is a recall notice provided
to owners of affected vehicles, pursuant to Sections 30118 to 30120,
inclusive, of Title 49 of the United States Code, the National
Highway Traffic and Motor Vehicle Safety Act (49 U.S.C. Sec.
30101, et seq.), when the vehicle manufacturer or the National
Highway Traffic Safety Administration informs the dealer to stop
the sale of the vehicle or contains preremedy precaution advice
to the owner to stop operating the vehicle.

(h) A “vehicle manufacturer” is a person who manufactures,
assembles, or distributes new motor vehicles, sold or leased, that
are subject to registration under this code.

begin insert 11754. end insert   

(a) A dealer shall not display or offer for sale at retail
a used vehicle, as defined in Section 665 and subject to registration
under this code, unless the dealer has obtained a recall database
report within 30 days of the display or offer.

(b) If a recall database report obtained by a dealer indicates
that a used vehicle is subject to a Stop Sale - Stop Drive recall,
the dealer is prohibited from selling or leasing that vehicle at retail
until the recall repair has been made.

(c) If a recall database report obtained by a dealer indicates
that a used vehicle is subject to a manufacturer’s recall and the
used vehicle is of the same line make as the franchise of the new
motor vehicle dealer, the dealer is prohibited from selling or
leasing that vehicle at retail until the recall repair has been made.

(d) If a recall database report obtained by a dealer indicates
that a used vehicle is subject to a manufacturer’s recall and the
used vehicle is not of the same line make as the franchise of the
new motor vehicle dealer or the dealer does not have a franchise,
the dealer may sell or lease the vehicle at retail if all of the
following are satisfied:

(1) The dealer discloses the manufacturer’s recall by providing
a copy of the recall database report to the consumer prior to sale
or lease.

(2) The consumer signs the disclosure acknowledging that the
vehicle has a manufacturer’s recall and that the consumer can get
the recall repaired at no cost to the consumer at a new motor
vehicle dealer of the vehicle’s line make.

(e) To comply with subdivision (d), and notwithstanding Section
2981.9 of the Civil Code, a recall database report, that indicates
the vehicle is subject to a manufacturer’s recall and the recall
repair has not been made, shall be disclosed and the disclosure
signed by the consumer in a document separate from the
conditional sales contract or other vehicle purchase agreement.

begin insert 11756. end insert   

(a) A rental car company shall not offer a vehicle for
rent unless the rental car company has obtained a recall database
report within 30 days of the offer.

(b) If a recall database report obtained by a rental car company
indicates that a vehicle is subject to a Stop Sale - Stop Drive recall,
the rental car company is prohibited from renting that vehicle until
the recall repair has been made.

(c) If a recall database report obtained by a rental car company
that a vehicle is subject to a manufacturer’s recall, the rental car
company may rent the vehicle if all of the following are satisfied:

(1) The rental car company discloses the manufacturer’s recall
by providing a copy of the recall database report to the consumer
prior to rental.

(2) The consumer signs the disclosure acknowledging that the
vehicle is subject to a manufacturer’s recall.

begin insert 11758. end insert   

(a) The department may refuse transfer of registration
of a motor vehicle under this code unless the transferee, in
submitting an application to the department for title, includes with
the application a statement signed and dated by the transferor
acknowledging that all Stop Sale - Stop Drive recalls and
manufacturer’s recalls were disclosed to the transferee as provided
in subdivision (c).

(b) If the title to a motor vehicle issued to a transferor is in the
possession of a lienholder when the transferor transfers ownership
of the vehicle, the transferor may use a written power of attorney
in making the recall disclosure required under subdivision (c).

(c) A transferor transferring registration of a motor vehicle
shall disclose, in writing, to the transferee all Stop Sale - Stop
Drive recalls and manufacturer’s recalls. A person acquiring the
vehicle shall not accept a vehicle transfer and reassignment
document unless it is complete.

(d) Subdivisions (a), (b), and (c) do not apply to the transfer of
a motor vehicle to a dealer or wholesaler.

begin insert 11760. end insert   

(a) A vehicle manufacturer shall clearly and
conspicuously display on its Internet Web Site and in all recall
notifications pursuant to Section 30118 of Title 49 of the United
States Code, the National Highway Traffic and Motor Vehicle
Safety Act (49 U.S.C. Sec. 30101, et seq.), whether a vehicle is
subject to a Stop Sale - Stop Drive recall.

(b) When a consumer seeks to repair a vehicle subject to a Stop
Sale - Stop Drive recall or manufacturer’s recall as identified in
a recall database report and the parts or procedures for the repair
are not yet available, the vehicle manufacturer shall, upon request
by the consumer, provide a rental or loaner vehicle to the consumer
at no cost to the consumer until the recall repair has been made.

(c) If a vehicle manufacturer requires a franchisee to provide
a rental or loaner vehicle to a consumer under subdivision (b),
the vehicle manufacturer shall adequately and fairly compensate
the franchisee for all costs incurred in providing a loaner or rental
vehicle to a consumer. For purposes of this paragraph, adequate
and fair compensation shall be the average daily rental amount
of____ dollars ($____) for each day a consumer uses a loaner or
rental vehicle.

(d) A vehicle manufacturer shall adequately and fairly
compensate each of its franchisees for all costs incurred in storing
vehicles with a Stop Sale - Stop Drive recall or manufacturer’s
recall in the franchisee’s possession if the parts or procedures are
not yet available to repair the recall of the vehicle. For purposes
of this paragraph, adequate and fair compensation shall be the
average daily amount of ____ dollars ($_____) for each day a
vehicle subject to a Stop Sale - Stop Drive recall or manufacturer’s
recall is in the franchisee’s possession, the parts or procedures
are not yet available to repair the recall of the vehicle, and the
recall repair has not been made.

begin insert 11762. end insert   

(a) This chapter shall not create any legal duty upon
the dealer, franchisee, rental car company, or private seller related
to the accuracy, errors, or omissions contained in a recall database
report or any legal duty to provide information added to a recall
database after the dealer, franchisee, rental car company, or
private seller obtained the recall database report pursuant to
Sections 11754, 11756, and 11758.

(b) The provisions of this article are severable. If any provision
of this article or its application is held invalid, that invalidity shall
not affect other provisions or applications that can be given effect
without the invalid provision or application.

(c) This chapter does not apply to the sale of a recreational
vehicle, a motorcycle, an off-highway motor vehicle subject to
identification under Section 38010, a vehicle sold by a dismantler
after being reported for dismantling pursuant to Section 11520,
or a vehicle sold by a salvage pool after obtaining a salvage pool
certificate pursuant to Section 11515 or a nonrepairable vehicle
certificate issued pursuant to Section 11515.2.

(d) This chapter shall become operative on July 1, 2016.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact the
Consumer Automotive Recall Safety Act to provide comprehensive
consumer protections that address the low recall repair completion
rate and consumer confusion regarding automotive recalls in
California.

end delete