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ReprintsClass action denied in suit alleging N.Y. dealership failed to disclose finance fees
A federal judge has denied class-action status in a Truth in Lending Act suit accusing a New York City dealership of failing to disclose fees charged to hundreds of customers receiving dealer-assisted financing.
The plaintiff provided insufficient statistical data to support her assertion that hundreds of credit customers paid fees that cash customers didn't have to pay, U.S. District Judge Jack Weinstein ruled.
Sherri Haynes bought a used 2006 Toyota Corolla from Planet Automall Inc., which does business as KG Suzuki in Long Island City. In addition to the $12,500 sales price, she paid a $1,301 processing fee and $3,000 for an extended warranty, both listed on the bill of sale as "customer requested dealer installed equipment and accessory," according to the suit. She obtained bank financing through the store.
The suit, which asks for compensatory and punitive damages under federal and state law, asserts that the dealer's processing fees, similar dealer fees, and extended warranties should be included in the finance charge, not hidden in the purchase price.
The dealership's court papers called the allegations "erroneous" and "frivolous."
Due to mechanical problems, the manufacturer later repurchased the Corolla as a lemon.
Based on a review of deal jackets, Haynes said the store charged a processing fee or dealer fee to 572 of 895 (63.9 percent) installment customers but only three of 74 (4.1 percent) cash customers during a two-year period. The store sold extended warranties on 373 of the 895 (41.7 percent) installment sales but on only one of 74 (1.4 percent) cash sales.
Weinstein ruled that those statistics aren't enough on their own to justify class-action status because they don't prove the store "applied a uniform policy that distinguished credit from cash customers."
There also was no allegation that the store made fraudulent statements, Weinstein said. "Each used car is unique" he said, and the fact that extended warranties "provided a large profit to the seller" didn't make them illegal.
Dealer lawyer Richard Simon of Kings Park, N.Y., said, "There's no question there was total disclosure." As for the plaintiff's attempt to rely solely on statistics to justify a class action, Simon said, the large number of credit customers who didn't pay a fee or buy an extended warranty shows those costs "weren't actually imposed on them."
Said plaintiff's lawyer Sergei Lemberg of Stamford, Conn.: "Class actions under the Truth in Lending Act are a tough gig, and that's demonstrated by Judge Weinstein's decision. Lemberg said he's deciding whether to ask the judge for reconsideration or proceed to trial on Haynes' individual claims.
You can reach Eric Freedman at freedma5@msu.edu.
