CalChamber Opposition Stops ‘Job Killer’ in Assembly Committee

​(July 3, 2013) Strong opposition from the California Chamber of Commerce stopped a “job killer” bill from passing the Assembly Business and Professions Committee yesterday. SB 686 (Jackson; D-Santa Barbara) would have exposed car dealers and rental car companies to significant liability related to “safety” recalls. According to The Sacramento Bee CapitolAlert, Senator Jackson pulled the measure and …”declared after a committee debate that she would put the bill over until 2014.”

SB 686 (Jackson; D-Santa Barbara) would have precluded car dealers and rental car companies from renting, leasing, loaning, or selling a car despite the lack of actual knowledge that the car was subjected to a recall that may or may not pose any imminent harm to the consumer or renter.

Only 10 of the 37”job killer” bills identified by CalChamber remain active.

No National Database of Repairs

Although there is a national database of information regarding general recalls issued for certain makes and models of vehicles, there is no similar database that identifies whether a particular vehicle has undergone the repairs necessary to fix the defect.

SB 686 implicitly recognized this problem and set forth other potential means for a dealer or rental car company to obtain information regarding the status of a recall, and included: the Internet website of a manufacturer; telephone number of a manufacturer; a franchisee of the manufacturer; or a vehicle history report.

While one of these four possibilities ultimately may have produced the necessary information, there was no guarantee that it would. Nevertheless, the dealer would have been imputed with knowledge that it has never received.

Moreover, there was no indication how many times or for what period the dealer must have attempted to obtain information from any of these four options, before the dealer could have reasonably assumed the vehicle was not under a safety recall. Failure on behalf of a dealer to satisfy these requirements would have resulted in litigation or liability.

Delay Implementation

May 24 amendments to SB 686 delayed implementation of the prohibitions in the bill on a licensed dealer until the effective date of federal regulations that require the creation of a national database that lists all recalls by vehicle identification number and whether the recall has been repaired. The effective date of the regulations, however, is not necessarily the date upon which the federal database will be functional.

The CalChamber had asked that SB 686 be delayed until there is a federal database that is searchable by make, model, and vehicle identification number (VIN) to identify whether a specific vehicle is subject to a recall and has been repaired. Until this database is created, SB 686 subjected dealers to a difficult standard.

‘Safety’ Undefined

Furthermore, the term “safety” was undefined and extremely subjective.

Essentially all recalls could be characterized as a safety issue, regardless of how imminent or significant the safety threat is as related to the defect.

Further clarity needed to be provided in order for licensed dealers to avoid needless litigation.

Last, SB 686 prohibited a licensed dealer from selling a vehicle as “certified” if it has been subject to a safety recall and the required repairs have not been performed. As set forth above, this was an extremely difficult standard for used car dealers to satisfy until the national database is available.

Even then, it is unlikely that the database would designate the recall as a “safety” issue versus a nonsafety recall.

Accordingly, SB 686 would have created uncertainty for used car dealers with regard to whether a specific recall fells within the “safety” category versus a minor fix, and whether such cars may be sold as “certified.”

Of course, any mistake by the dealer with regard to this characterization would result in litigation and possible liability.

The prohibition would have an impact on the used-car market as well as consumers’ ability to trade in such a car, thereby potentially forcing them to engage in a private party sale in the underground economy.