Amended in Assembly June 4, 2014

Amended in Senate May 24, 2013

Amended in Senate May 7, 2013

Amended in Senate April 22, 2013

Amended in Senate April 1, 2013

Senate Bill No. 686

Introduced by Senator Jackson

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(Principal coauthor: Assembly Member Dickinson)

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(Coauthor: Senator Monning)

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(Coauthor: Assembly Member Bonta)

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February 22, 2013

An act to begin delete amend Section 11713.18 of, and to end delete add Sections begin insert 390, end insert 11713.27 begin insert , end insert and 11713.28 to, the Vehicle Code, relating to vehicles.

LEGISLATIVE COUNSEL’S DIGEST

SB 686, as amended, Jackson. Vehicles: vehicle dealers.

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Existing law provides that it is a violation of the Vehicle Code for the holder of any dealer’s license issued as specified 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 specified provisions apply, including, but not limited to, the dealer knows or should have known that the vehicle has sustained frame damage, and the dealer disclaims any warranties of merchantability on the vehicle. Under existing law, a violation of these provisions is a crime.

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The bill would also prohibit that representation from being made if the dealer knows or should have known that the vehicle is subject to a manufacturer’s safety recall, and the repairs required to correct the defect have not been performed on the vehicle. By creating a new crime, the bill would impose a state-mandated local program.

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Existing begin delete law provides that it is unlawful for a lessor-retailer to sell a vehicle without a vehicle dealer license or temporary permit. Existing end delete law prohibits a licensed dealer from engaging in certain practices, including, among others, making an untrue or misleading statement indicating that a vehicle is equipped with all the factory-installed optional equipment the manufacturer offers. Under existing law, a violation of these provisions is a crime.

This bill would begin insert , subject to exceptions, end insert additionally prohibit a dealer from selling, leasing begin delete for an initial term of less than 4 months end delete , renting, loaning, or otherwise transferring ownership at retail of a used vehicle, as specified, if the dealer knows or should have known that the vehicle is subject to a manufacturer’s safety recall, unless the repairs required to correct the defect have been performed on the vehicle. The bill would begin insert , subject to exceptions, end insert additionally prohibit a rental company that is also a dealer from selling or otherwise transferring ownership at retail of a used vehicle, if the rental company knows or should have known that the vehicle is subject to a manufacturer’s safety recall, unless the repairs required to correct the defect have been performed on the vehicle. The bill would begin delete require a dealer to obtain information about a used vehicle’s safety recall status, as specified. By creating a new crime, this end delete begin insert define the term “manufacturer’s safety recall.” Because a violation of these provisions would be a crime under other provisions of existing law, the end insert bill would impose a state-mandated local program. The bill would also make a violation of these provisions actionable under the Consumers Legal Remedies Act and the Unfair Competition Law, and as false advertising. begin delete Specified prohibitions of this bill would become operative upon the initial effective date of the regulations adopted pursuant to a provision of the federal Moving Ahead for Progress in the 21st Century Act that implement that act. The bill would correct erroneous cross-references. end delete

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:

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SECTION 1.  

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 dealer knows or should have known that the vehicle
is subject to a manufacturer’s safety recall, and the repairs required
to correct the defect have not been performed on the vehicle. The
prohibition of this paragraph shall become operative on the initial
effective date of the regulations adopted pursuant to Section 31301
of the federal Moving Ahead for Progress in the 21st Century Act
(Public Law 112-141), that implement that act.

(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.

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begin insert SECTION 1. end insert   

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begin insert Section 390 is added to the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

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begin insert 390. end insert   

“Manufacturers safety recall” means a recall pursuant
to Section 30118 of Title 49 of the United States Code, of the
National Highway Traffic and Motor Vehicle Safety Act (49 U.S.C.
Sec. 30101, et. seq). It does not include service campaigns or
emission recalls where the manufacturer has not issued a safety
recall notice to owners of affected vehicles, pursuant to Section
30118 of Title 49 of the United States Code.

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SEC. 2.  

Section 11713.27 is added to the Vehicle Code, to
read:

11713.27.  

(a) Except for a rental company, as defined in
Section 1936 of the Civil Code, a dealer issued a license under
this article shall not sell, begin delete lease for an initial term of less than four
months, end delete begin insert lease, end insert rent, loan, or otherwise transfer ownership at retail
of a used vehicle, as defined in Section 665 and subject to
registration under this code, begin insert including any used vehicle advertised
as “certified” or any similar descriptive term, end insert if the dealer knows
or should have known that the vehicle is subject to a manufacturer’s
safety recall, unless the repairs required to correct the defect have
been performed on the vehicle. begin insert This section does not apply to
transfers or sales by a dealer to another dealer, an auto auction,
or a manufacturer. end insert

(b) For purposes of this section, a dealer is deemed to have
knowledge of a manufacturer’s safety recall if begin delete either end delete begin insert any end insert of the
following applies:

(1) The dealer receives notification from the manufacturer begin insert of
the vehicle about the manufacturer’s safety recall for that vehicle,
pursuant to subdivision (b) or (c) of Section 30118 or Section
30119 of Title 49 of the United State Code end insert .

(2) The dealer is a franchisee of the manufacturer begin insert , or was a
franchisee of the manufacturer at the time the manufacturer issued
the notice of the safety recall end insert .

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(3) Prior to the sale, lease, loan, rental, or other transfer of
ownership at retail of the vehicle, the manufacturer has made
information about the manufacturer’s safety recall regarding the
specific vehicle available on the manufacturer’s Internet Web site,
searchable by the vehicle identification number, stating that the
manufacturer’s safety recall repairs have not been performed.

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(c) In the absence of knowledge pursuant to subdivision (b),
and until auto manufacturers are required to provide vehicle safety
recall data on a publicly accessible Internet Web site pursuant to
Section 31301 of the federal Moving Ahead for Progress in the
21st Century Act (Public Law 112-141), a dealer shall obtain
information about a vehicle’s safety recall status prior to
completing a transaction subject to this section from at least one
of the following sources of information:

(1) The Internet Web site of the manufacturer, provided that the
safety recall status of the vehicle is made available by the
manufacturer.

(2) A toll-free telephone number, provided that the manufacturer
has made the safety recall status of the vehicle available at that
number.

(3) Another dealer that is a franchisee of the manufacturer.

(4) A commonly available vehicle history report, provided that
the safety recall status of the vehicle is available.

(d) When auto manufacturers are required to provide vehicle
safety recall data on a publicly accessible Internet Web site
pursuant to Section 31301 of the federal Moving Ahead for
Progress in the 21st Century Act (Public Law 112-141), a dealer
shall obtain information about a used vehicle’s safety recall status
from that database.

(e)

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begin insert (c) end insert  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, and 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.

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(f) The prohibition of this section shall become operative on
the initial effective date of the regulations adopted pursuant to
Section 31301 of the federal Moving Ahead for Progress in the
21st Century Act (Public Law 112-141), that implement that act.

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SEC. 3.  

Section 11713.28 is added to the Vehicle Code, to
read:

11713.28.  

(a) A rental company, as defined in Section 1936
of the Civil Code, that is also a dealer licensed under this article
shall not sell or otherwise transfer ownership at retail of a used
vehicle, as defined in Section 665 and subject to registration under
this code, begin insert including any used vehicle advertised as “certified” or
any similar descriptive term, end insert if the rental company knows or should
have known that the vehicle is subject to a manufacturer’s safety
recall, unless the repairs required to correct the defect have been
performed on the vehicle. begin insert This section does not apply to transfers
or sales by a rental company to a dealer, an auto auction, or a
manufacturer. end insert

(b) For purposes of this section, a rental company is deemed to
have knowledge of a manufacturer’s safety recall begin delete when the end delete begin insert if either
of the following applies: end insert

begin insert (1) end insert begin insert   end insert begin insert The end insert rental company receives notification begin insert from the
manufacturer of the vehicle end insert of the manufacturer’s safety recall begin insert for
that end insert begin insert vehicle end insert pursuant to subdivision (b) or (c) of Section 30118 or
Section 30119 of Title 49 of the United States Code.

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(2) Prior to the sale or other transfer of ownership at retail of
the vehicle, the manufacturer has made information about the
manufacturer’s safety recall regarding the specific vehicle
available on the manufacturer’s Internet Web site, searchable by
the vehicle identification number, stating that the manufacturer’s
safety recall repairs have not been performed.

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(c) In the absence of knowledge pursuant to subdivision (b) of
this section, and until auto manufacturers are required to provide
vehicle safety recall data on a publicly accessible Internet Web
site pursuant to Section 31301 of the federal Moving Ahead for
Progress in the 21st Century Act (Public Law 112-141), a rental
company shall obtain information about a vehicle’s safety recall
status prior to completing a transaction subject to this section from
at least one of the following sources of information:

(1) The Internet Web site of the manufacturer, provided that the
safety recall status of the vehicle is made available by the
manufacturer.

(2) A toll-free telephone number, provided that the manufacturer
has made the safety recall status of the vehicle available at that
number.

(3) Another dealer that is a franchisee of the manufacturer.

(4) A commonly available vehicle history report, provided that
the safety recall status of the vehicle is available.

(d) When auto manufacturers are required to provide vehicle
safety recall data on a publicly accessible Internet Web site
pursuant to Section 33101 of the federal Moving Ahead for
Progress in the 21st Century Act (Public Law 112-141), rental car
companies shall obtain information about a used vehicle’s safety
recall status from that database.

(e)

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begin insert (c) end insert  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, and 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.

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(f) The prohibition of this section shall become operative on
the initial effective date of the regulations adopted pursuant to
Section 31301 of the federal Moving Ahead for Progress in the
21st Century Act (Public Law 112-141), that implement that act.

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SEC. 4.  

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.