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John Q. Public, Have We Got a Deal for You: Special Interest Legislation

At the same time the public appears to be exasperated at the prevalence of corporate thievery, special interest groups are still having their way with our legislators. An example of special legislation gone awry in the federal context is the Motor Vehicle Franchise Contract Arbitration Fairness Act (the “Arbitration Fairness Act”) signed into law on November 2, 2002. As most people know, predispute arbitration agreements are pervasive in our society. Corporations seek to use them for many reasons including the ability to limit their exposure or shield them from punitive damages and class actions, and to limit discovery of other bad practices. Many commentators believe arbitration agreements are a way to prevent jurors from holding corporations responsible for their actions and have questioned the use of arbitration clauses where there is a disparity in bargaining power between the car dealer and the consumer and where the clauses have been included in contract documents before a dispute arises.

Car dealers are one group intimately familiar with the use of these agreements and they often include these clauses in any agreement for the sale or lease of a car or truck. As between the car dealer and the consumer, it is almost always the car dealer who is more sophisticated and who has superior bargaining power. However, car dealers deal with one party with greater bargaining power than themselves: the manufacturer from whom they purchase cars and trucks. Car dealers did not like manufacturers using arbitration clauses against them so they took action and obtained passage of the Arbitration Fairness Act.

The Arbitration Fairness Act was designed to protect car dealers by prohibiting manufacturers from including predispute arbitration clauses in motor vehicle franchise contracts. Under the Federal Arbitration Act, it is generally illegal for states to specifically prohibit arbitration agreements for transactions involving interstate commerce and the courts have determined that almost any purchase today falls within the interstate commerce. The narrow exception granted to car dealers by Congress and President Bush was unprecedented and reflects the legislative clout of car dealers.

Not to be outdone, two Republican Legislators in the Florida House, Representative Ross from Lakeland, and Senator Bennett from Bradenton, have recently introduced a bill in Florida that would provide car dealers special protection from lawsuits. Believe it or not, House Bill 1181 would prohibit suits against car dealers under the Deceptive and Unfair Trade Practices Act unless the car dealers were given at least 30 days notice of the suit and would protect car dealers from having to pay a consumer’s attorney’s fees in many instances; hence, consumers would have an even harder time finding consumer protection attorneys willing to take their case on a contingency fee basis. The Act would also allow car dealers to request a summary procedure which would limit discovery into whether the car dealer’s conduct was widespread.

The goal of the law appears to be an effort to limit enforcement of consumer laws to the overworked and underfunded Attorney General's office and the Department of Motor Vehicles. While the employees of these agencies have good intentions, they cannot police the car dealers themselves. As an example, when is the last time the Department of Motor Vehicles suspended or revoked a dealer's license for fraud before the dealer had already stopped doing business. I have three clients, who like many others, would like to know. The $25,000 dealer surety bond paid just cents on the dollar for their claims against Terry Motors of Lake County. We should have learned from Enron that public regulation is not enough. Car dealers are attempting to once again take away the keys to the courthouse. The bill has not yet been signed into law but this is another example of special interest legislation gone awry. Sorry, John Q. Public, you will have to move to the back of the line unless, of course, you are on the “A list” of campaign contributors. As a person who usually votes Republican, I am truly embarrassed.