BILL NUMBER: AB 287 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 13, 2016
AMENDED IN SENATE JUNE 6, 2016
AMENDED IN ASSEMBLY MAY 28, 2015
AMENDED IN ASSEMBLY MAY 4, 2015
AMENDED IN ASSEMBLY MARCH 23, 2015
INTRODUCED BY Assembly Members Gordon, Eggman, and Mark Stone
(Principal coauthor: Assembly Member Wilk)
(Coauthors: Assembly Members Dababneh, Jones, and Lackey)
FEBRUARY 11, 2015
An act to amend Sections 3065 and 11713.18 of, and to add Article
1.1 (commencing with Section 11750) to Chapter 4 of Division 5 of,
the Vehicle Code, relating to vehicle safety.
LEGISLATIVE COUNSEL'S DIGEST
AB 287, as amended, Gordon. Vehicle safety: recalls.
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. A violation of the Vehicle Code is
a crime.
This bill would enact the Consumer Automotive Recall Safety Act,
which would become operative on July 1, 2017. The act would prohibit
a dealer or rental car company, as defined, from loaning, renting, or
offering for loan or rent a vehicle subject to a manufacturer's
recall after receiving a notice of the recall, as specified, until
the vehicle has been repaired, except as specified. The act would
require a dealer to obtain a recall database report, as defined,
within 30 days of displaying or offering for sale
before displaying or offering for sale, and every 30 days
thereafter, a used vehicle advertised as "certified," or any
similar descriptive term, that implies the vehicle has been certified
to meet the terms of a used vehicle certification program. If a
recall database report indicates that the used vehicle is subject to
a manufacturer's recall, the act would prohibit a dealer from
advertising or selling the vehicle as "certified" or any similar
descriptive term until the recall repair has been made. The act would
also require the Department of Motor Vehicles to obtain a recall
database report before mailing a notice of registration renewal to
the registered owner of a vehicle and, if the recall database report
indicates the vehicle is subject to a manufacturer's recall, to
include a specified recall disclosure statement with the notice of
registration renewal. This requirement would not take effect until
the Director of Motor Vehicles executes a declaration, as specified,
certifying that the department has appropriate access to the
necessary data within a recall database and available funding to
include the recall disclosure statement. By creating new
prohibitions, the violation of which would be a crime under existing
law, this bill would impose a state-mandated local program.
Existing law requires a vehicle franchisor to properly fulfill
every warranty agreement made by it and adequately and fairly
compensate each of its franchisees for labor and parts used to
fulfill that warranty when the franchisee has fulfilled warranty
obligations of diagnostics, repair, and servicing.
This bill would specify that the warranty obligations include all
costs associated with the disposal of hazardous materials that are
associated with a recall. The bill would provide, for purposes of the
above-described warranty obligations, that a warranty includes a
recall conducted pursuant to federal motor vehicle safety laws. The
bill would state that this provision is declaratory of existing law.
Existing law makes it a violation of the Vehicle Code for the
holder of a dealer's license to advertise for sale or sell a used
vehicle as "certified" if, among other things, the dealer knows the
odometer on the vehicle does not indicate actual mileage, the dealer
knows the vehicle has sustained frame damage, or the dealer fails to
provide the buyer with a completed inspection report indicating all
the components inspected prior to sale.
This bill would additionally make it a violation of the Vehicle
Code for the holder of a dealer's license to advertise for sale or
sell a used vehicle as "certified" if the vehicle is subject to an
unremedied manufacturer's recall described in a recall database
report.
The bill would state findings and declarations of the Legislature
relative to vehicle recalls.
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.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares all of the
following:
(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 51 million
recalls were issued in 2015, 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.
(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.
(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 to the public.
(b) Accordingly, it is the intent of the Legislature in enacting
this act to increase consumer awareness of unrepaired recalls on
their cars, to ensure that consumers have access to loaner and rental
vehicles free of any unrepaired recalls, and to safeguard the
advertising of "certified" used cars.
(c) The Legislature further finds and declares all of the
following:
(1) The distribution, sale, and service of new motor vehicles in
the State of California vitally affect the general economy of this
state and the public welfare.
(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.
(3) California franchise laws require manufacturers to provide
reasonable reimbursement to dealers for warranty and recall work, but
fail to establish guidelines for compensating franchisee disposal
costs associated with hazardous waste generated by repairs on
recalled vehicles.
(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 and that new motor vehicle dealer
franchisees are reasonably compensated for repairs on recalled
vehicles.
SEC. 2. Section 3065 of the Vehicle Code is amended to read:
3065. (a) Every franchisor shall properly fulfill every warranty
agreement made by it and adequately and fairly compensate each of its
franchisees for labor and parts used to fulfill that warranty when
the franchisee has fulfilled warranty obligations of diagnostics,
repair, and servicing and shall file a copy of its warranty
reimbursement schedule or formula with the board. The warranty
reimbursement schedule or formula shall be reasonable with respect to
the time and compensation allowed to the franchisee for the warranty
diagnostics, repair, servicing, and all other conditions of the
obligation, including all costs associated with the disposal of
hazardous materials that are associated with a recall. The
reasonableness of the warranty reimbursement schedule or formula
shall be determined by the board if a franchisee files a protest with
the board. A franchisor shall not replace, modify, or supplement the
warranty reimbursement schedule to impose a fixed percentage or
other reduction in the time and compensation allowed to the
franchisee for warranty repairs not attributable to a specific
repair. A franchisor may reduce the allowed time and compensation
applicable to a specific warranty repair only upon 15 days' prior
written notice to the franchisee. Any protest challenging a reduction
in time and compensation applicable to specific parts or labor
operations shall be filed within six months following the franchisee'
s receipt of notice of the reduction, and the franchisor shall have
the burden of establishing the reasonableness of the reduction and
adequacy and fairness of the resulting compensation.
(b) In determining the adequacy and fairness of the compensation,
the franchisee's effective labor rate charged to its various retail
customers may be considered together with other relevant criteria. If
in a protest permitted by this section filed by any franchisee the
board determines that the warranty reimbursement schedule or formula
fails to provide adequate and fair compensation or fails to conform
with the other requirements of this section, within 30 days after
receipt of the board's order, the franchisor shall correct the
failure by amending or replacing the warranty reimbursement schedule
or formula and implementing the correction as to all franchisees of
the franchisor that are located in this state.
(c) If any franchisor disallows a franchisee's claim for a
defective part, alleging that the part, in fact, is not defective,
the franchisor shall return the part alleged not to be defective to
the franchisee at the expense of the franchisor, or the franchisee
shall be reimbursed for the franchisee's cost of the part, at the
franchisor's option.
(d) (1) All claims made by franchisees pursuant to this section
shall be either approved or disapproved within 30 days after their
receipt by the franchisor. Any claim not specifically disapproved in
writing within 30 days from receipt by the franchisor shall be deemed
approved on the 30th day. All claims made by franchisees under this
section and Section 3064 for labor and parts shall be paid within 30
days after approval.
(2) A franchisor shall not disapprove a claim unless the claim is
false or fraudulent, repairs were not properly made, repairs were
inappropriate to correct a nonconformity with the written warranty
due to an improper act or omission of the franchisee, or for material
noncompliance with reasonable and nondiscriminatory documentation
and administrative claims submission requirements.
(3) When any 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. The franchisor shall provide for a
reasonable appeal process allowing the franchisee at least 30 days
after receipt of the written disapproval notice to provide 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
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.
(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) Failure to approve or pay within the above specified time
limits, in individual instances for reasons beyond the reasonable
control of the franchisor, shall not constitute a violation of this
article.
(6) Within six months after either receipt of the written notice
described in paragraph (3) or (4), whichever is later, a franchisee
may file a protest with the board for determination of whether the
franchisor complied with the requirements of this subdivision. In any
protest pursuant to this subdivision, the franchisor shall have the
burden of proof.
(e) (1) Audits of franchisee warranty records may be conducted by
the franchisor on a reasonable basis 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 or charged
back to the franchisee unless the claim is false or fraudulent,
repairs were not properly made, repairs were inappropriate to correct
a nonconformity with the written warranty due to an improper act or
omission of the franchisee, or for material noncompliance with
reasonable and nondiscriminatory documentation and administrative
claims submission requirements. A franchisor shall not disapprove 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 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 receipt of the written notice described in paragraph (3)
or paragraph (4), whichever is later. Any chargeback to a franchisee
for warranty parts or service compensation shall be made within 90
days of receipt of that written notice. 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. 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 either receipt of the written
disapproval notice or completion of the franchisor's appeal process,
whichever is later, a franchisee may file a protest with the board
for determination of whether the franchisor complied with this
subdivision. In any protest pursuant to this subdivision, the
franchisor shall have the burden of proof.
(f) 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.
(g) For purposes of this section, "warranty" includes a recall
conducted pursuant to Sections 30118 to 30120, inclusive, of Title 49
of the United States Code. This subdivision is declaratory and not
amendatory of existing law.
SEC. 3. Section 11713.18 of the Vehicle Code is amended to read:
11713.18. (a) It is a violation of this code for the holder of
any dealer's license issued under this article to advertise for sale
or sell a used vehicle as "certified" or use any similar descriptive
term in the advertisement or the sale of a used vehicle that implies
the vehicle has been certified to meet the terms of a used vehicle
certification program if any of the following apply:
(1) The dealer knows or should have known that the odometer on the
vehicle does not indicate actual mileage, has been rolled back or
otherwise altered to show fewer miles, or replaced with an odometer
showing fewer miles than actually driven.
(2) The dealer knows or should have known that the vehicle was
reacquired by the vehicle's manufacturer or a dealer pursuant to
state or federal warranty laws.
(3) The title to the vehicle has been inscribed with the notation
"Lemon Law Buyback," "manufacturer repurchase," "salvage," "junk,"
"nonrepairable," "flood," or similar title designation required by
this state or another state.
(4) The vehicle has sustained damage in an impact, fire, or flood,
that after repair prior to sale substantially impairs the use or
safety of the vehicle.
(5) The dealer knows or should have known that the vehicle has
sustained frame damage.
(6) Prior to sale, the dealer fails to provide the buyer with a
completed inspection report indicating all the components inspected.
(7) The dealer disclaims any warranties of merchantability on the
vehicle.
(8) The vehicle is sold "AS IS."
(9) The term "certified" or any similar descriptive term is used
in any manner that is untrue or misleading or that would cause any
advertisement to be in violation of subdivision (a) of Section 11713
of this code or Section 17200 or 17500 of the Business and
Professions Code.
(10) The vehicle is subject to an unremedied manufacturer's recall
described in a recall database report required by Section 11756.
(b) A violation of this section is actionable under the Consumers
Legal Remedies Act (Title 1.5 (commencing with Section 1750) of Part
4 of Division 3 of the Civil Code), the Unfair Competition Law
(Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of
the Business and Professions Code), Section 17500 of the Business
and Professions Code, or any other applicable state or federal law.
The rights and remedies provided by this section are cumulative and
shall not be construed as restricting any right or remedy that is
otherwise available.
(c) This section does not abrogate or limit any disclosure
obligation imposed by any other law.
(d) This section does not apply to the advertisement or sale of a
used motorcycle or a used off-highway motor vehicle subject to
identification under Section 38010.
SEC. 4. Article 1.1 (commencing with Section 11750) is added to
Chapter 4 of Division 5 of the Vehicle Code, to read:
Article 1.1. Consumer Automotive Recall Safety Act
11750. This article shall be known, and may be cited, as the
Consumer Automotive Recall Safety Act (CARS Act).
11752. As used in this article, 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.
(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.
(c) A "recall database" is a database from which an individual may
obtain vehicle identification number (VIN) specific 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.
(d) A "recall database report" is a report, specific to a vehicle
that is identified by its VIN, containing information obtained from a
recall database.
(e) A "rental car company" is a person or entity in the business
of renting passenger vehicles to the public in California.
(f) The term "used vehicle" has the same meaning as set forth in
Section 665.
11754. (a) No later than 48 hours after receiving a notice of a
manufacturer's recall, or sooner if practicable, a dealer or rental
car company shall not loan, rent, or offer for loan or rent a vehicle
subject to that recall until the recall repair has been made.
(b) If a recall notification indicates that the remedy for the
recall is not immediately available and specifies actions to
temporarily repair the vehicle in a manner to eliminate the safety
risk that prompted the recall, the dealer or rental car company,
after having the repairs completed, may loan or rent the vehicle.
Once the remedy for the vehicle becomes available to the dealer or
rental car company, the dealer or rental car company shall not loan
or rent the vehicle until the vehicle has been repaired.
11756. (a) For every used vehicle advertised for sale as
"certified" or any similar descriptive term in the advertisement or
the sale of a used vehicle that implies the vehicle has been
certified to meet the terms of a used vehicle certification program,
a dealer shall obtain a recall database report within 30
days of the display or offer. before the display or
offer and every 30 days thereafter until the vehicle is no longer
displayed or offered for sale.
(b) If a recall database report obtained by a dealer indicates
that a used vehicle is subject to a manufacturer's recall, the dealer
shall not advertise for sale or sell that vehicle as "certified" or
use any similar descriptive term in the advertisement or the sale of
the used vehicle that implies the vehicle has been certified to meet
the terms of a used vehicle certification program until the recall
repair has been made.
11758. (a) Before mailing a notice of registration renewal to the
registered owner of a vehicle, pursuant to Section 1661, the
department shall obtain a recall database report for that vehicle. If
the recall database report indicates that the vehicle is subject to
a manufacturer's recall, the department shall notify the registered
owner by checking the box next to the recall disclosure statement
specified in subdivision (b).
(b) The department shall include the following recall disclosure
statement on the notice of registration renewal for a vehicle subject
to a manufacturer's recall:
"This
"WARNING. This vehicle has an unrepaired manufacturer's
recall. You can get this recall repaired for free. You can check for
any recalls and how to get the recall repaired at the National
Highway Traffic Safety Administration's Internet Web site."
(c) This section shall become operative on the date that the
Director of Motor Vehicles executes a declaration, to be retained by
the director, in which the director certifies that the department has
appropriate access to the necessary data within a recall database
and available funding to include a recall disclosure statement on the
notice of registration renewal for a vehicle subject to a
manufacturer's recall. The director shall post the declaration on the
department's Internet Web site and shall send the declaration to the
appropriate committees of the Legislature and to the Legislative
Counsel.
11760. This article shall not create any legal duty upon the
dealer, rental car company, or department 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, rental car company, or department obtained the recall
database report pursuant to Sections 11754, 11756, and 11758.
11760.5. The rights and remedies provided by this article are
cumulative and shall not be construed as restricting any right or
remedy that is otherwise available.
11761. This article 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.
11762. 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.
11763. Except as otherwise provided in Section 11758, this
article shall become operative on July 1, 2017.
SEC. 5. 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.