Legal Archives - Storytailer

Compliance: Can You Be Harassed By A CRM?

February 4, 2015 By Arnold Tijerina

For the past 2 years, one of the items on my daily to-do list has been grading Internet leads for DealerKnows Consulting. This process involves assisting DealerKnows in monitoring the progress of their clients through monitoring the ISM’s lead handling within the CRM. This provides valuable insight into what exactly is happening with leads (i.e. is the store following the process installed through DealerKnows and, if not, what exactly is happening) and indicating where additional training is needed.

In one particular client ‘s CRM, I started noticing one of the employees tasked with responding to, and communicating with, Internet leads inputting questionable notes into the CRM. Keep in mind; he was not doing anything inappropriate in his communication with the customer but, at times, expressing his frustration and/or opinions of customers through notes in the CRM.

Notes like:

F$@k this bitch!
Screw this mooch!
What a stroke!
I hope this customer gets fired for being an a$$hole!

Now, I was in retail a long time. I understand his frustration. That being said, I mentioned to him and his manager that he shouldn’t be using derogatory terms in the CRM. First, this particular store works as a team (ie. the leads aren’t solely one person’s responsibility). Whoever is working when a call or email needs to be made handles it. In the past, this team was a bunch of guys. Recently, a female was added. I mentioned it again within the context of the fact that the notes bring negativity into the lead for the next person who looks at it. In addition, it could offend someone else looking at the lead within the CRM. Even a female member of DealerKnows chimed in that the notes offended her.

The real question, however, is not one of appropriateness but rather one of compliance and liability. I was curious as to whether there could be harassment or employment issues. In that spirit, I decided to contact an expert in automotive dealer compliance. I contacted the founder of Dealer Compliance Consultants, Jim Radogna, a longtime auto guy with over 15 years experience in just about every dealership management position, over 6 years experience in assisting dealerships with compliance as well as an avid writer and frequent speaker in the automotive industry.

His answer was simple:

“It doesn’t matter where offensive material resides. It can be comments in a CRM that others can view – on a computer screen, mobile device or hanging on a wall – if anyone sees it and is offended by it, it can create a hostile work environment and put the dealership at risk.

People often have such different perspectives on behaviors that it is easy to offend someone through ill-considered attempts at humor, teasing or sarcasm. Remember that only the impact, and not the intent, matters in determining if a reasonable person would consider the behavior to be harassment.”

I was in retail. I get it. Sometimes customers can be frustrating. Sometimes we (being salespeople, managers, etc.) express our frustrations verbally and, perhaps, everyone on the team (or within hearing distance) is okay with the language or sentiment.

The bottom line is that allowing or condoning this type of behavior only accomplishes two things:

1. It permanently etches that customer in a negative light for any future employees. Think about it… perhaps the employee who inserted the notes gets fired (not that anyone EVER gets fired or leaves dealerships) and a new employee is tasked with going through and/or following up with these leads. Do you think these notes will encourage them to follow up or discourage them? Would they be quicker to mark them “Lost” and move on? What happens if you want to do some data mining and try to resurrect some leads? Negativity is a virus. It spreads easily. Allowing anyone to cultivate negativity in your business is simply a recipe for failure – not only for them but also for all of your employees.

2. It creates liability for the dealership. Allowing anyone to continue with this behavior transfers liability to you and, as a manager, to the dealership. Those notes may seem harmless now but when a harassment or hostile workplace environment lawsuit is filed, it could get quite expensive. In addition, by allowing these types of notes, you could technically be cultivating a PERMANENT hostile workplace environment. If you fired the offending employee today and two years from now another employee comes across these notes (perhaps by getting a new lead from the same customer… not like that ever happens) and is offended, what then? What if that that customer eventually buys the car and your dealership uses your CRM for service and a service advisor, cashier or other employee is exposed to those notes?

Imagine this scenario: An employee writes something offensive in Sharpie on the wall in the bathroom. It doesn’t offend anyone and nobody cleans it off. Three years later, a new employee comes along, reads the note and is offended.

What then?

It makes no difference WHEN the notes were made or whether the person who wrote the note(s) works there any longer. It is still the dealership’s responsibility and it would still be held responsible (and liable) for the existence of the notes.

My advice is simple:

If you wouldn’t hang it on the wall in your office for anyone to see, don’t put it anywhere – and that includes inside your CRM.

Ford Says Consumer Privacy Is Impractical

May 22, 2012 By Arnold Tijerina

In a Yahoo! exclusive article published today, it was reported that Ford has initiated a lawsuit against 13 individual eBay sellers who they accuse of selling fake or counterfeit Ford parts. I’m not arguing the merits of Ford’s lawsuit as it is certainly within their rights to protect their trademarks and copyrights as well as take steps to protect dealer’s profits in the part business but rather to question the bigger issue encompassed by this: an individual’s right to privacy.

The subpoenas for the lawsuits were granted by the court for Ford to obtain the seller’s identities and information. What is unusual about this is not that they requested it, but what they asked for after that request was granted.

As reported in the article, most ISPs and websites have policies in place that notify users when the company gives out their information for any reason except for that involving criminal activity and which is requested by law enforcement agencies.

In this case, Ford not only requested the user’s information but also asked for their bank account information (which was denied) then went a step further and asked for the court to prohibit eBay and Paypal (an eBay company) from notifying the targeted users that their information was requested and given out.

This move flies in the face of all privacy issues. With the public outcry against the recent legislation effectively designed to skirt privacy issues accompanied by Ford’s strong pro-consumer brand and social media presence, you’d think they would want to steer clear of any controversy in regards to consumer privacy.

“Much of the debate in recent months over online privacy has been spurred by bills in Congress, such as the Stop Online Piracy Act and a new bill, the Cyber Intelligence Sharing and Protection Act, which passed the U.S. House in April. CISPA would let companies and law enforcement agencies broadly share users’ personal information to fight potential threats — including accusations of copyright violations and counterfeit goods — without penalty, trumping any company policy.” writes Justin Hyde in the Yahoo! article.

The reason reported by Ford for this request was:

“Ford respectfully suggests this procedure is impractical and would serve to undermine the rationale for the subpoenas. The procedure would impose a substantial burden on [eBay and PayPal] to prepare, serve and enforce subpoenas and would serve to “tip-off” or warn the Doe defendants of Ford’s investigation. Under the procedure as written, the Does would have notice that Ford was seeking their identities and thus ample time to destroy evidence, the counterfeit and infringing goods, and flee to avoid service all before Ford would be entitled to receive their true identities.”

I understand why they asked the court to do this but just because it’s a good reason doesn’t mean it should outweigh the right to privacy that all citizens enjoy. This is a civil matter, not a criminal one.

Now that one court has issued what I feel is an invasion of privacy, what’s to stop other judges from following suit. I can think of plenty of GOOD reasons for a judge to do this but that doesn’t mean they SHOULD. Where does an ISP or website draw a “line in the sand”? Despite Facebook’s own internal privacy issues, they have, and are still, fighting other companies from requiring or being allowed to access their user’s information and accounts including employer’s requesting pre-employment access, schools requiring students to reveal their Facebook walls to administrators and more.

Being an eBay user for over 14 years and a Paypal user for about 12, I would hope that they would challenge and fight for their user’s right to privacy. It’ll be interesting to see how this plays out and whether any of the companies involved will take a stand for their users.

While Ford may feel that their lawsuit against 13 people succeeding is more important than our rights to privacy, I just find that.. well.. impractical.

Buy Here ‘Cause They Suck

November 2, 2011 By Arnold Tijerina

Most dealerships and businesses in general know that it’s bad practice to bad-mouth your competition. That being said, I know of and have heard plenty of salespeople and managers using their online reviews to help close a deal by comparing them to their competitors online reviews. This practice is similar if not exactly the same. You are leveraging negative comments about your competitor left by other people (who you are representing as real – we all know fake reviews exist) to your positive reviews (you aren’t really showing people any negative reviews about your dealership, are you?) in an effort to “sell” yourself and your dealership. So, while this isn’t talking bad about your competitor directly, it is indirectly, and what you say can now get you in some deep water.

In a precendent setting ruling, an Alabama car dealership has been awarded $7.5 million dollars due to slanderous comments made during a close to consumers by both the salesperson and sales manager. Apparentley, the dealership’s competitor was owned by an Iranian-born but naturalized U.S. citizen. The sales manager told at least one couple while attempting to close a deal that the competitor was “helping fund insurgents there and is also laundering money for them.” The salesperson was also accused of telling the same couple that the dealer was “funneling money back to his family and other terrorists…” and that he has a “brother over there and what you’re doing is helping kill my brother.” It is also reported that the competitor was frequently referred to as “Taliban Toyota”.

The jury awarded the Alabama dealer $2.5 million in compensatory damages and $5 million in punitive damages after deliberating for 3 hours.

While this is certainly an extreme example, it bears watching where the “line” is. This had more to do with a leveraging of race, stereotypes and bigotry but there’s no telling what future lawsuits outcomes would be utilizing this ruling as precedent.

I find it astonishing that, it appears, the sales manager, at least, is still employed at the dealership based on the statement that neither of them were available for comment per a “dealership spokesman”.

I think there are now 7.5 million reasons to add prohibiting the “bad-mouthing of your competitor” to your employee handbook.

What Does The Government Think About Your Social Media Policy?

September 9, 2011 By Arnold Tijerina

Back in June, I broke news on a case that involved a BMW dealership firing a salesperson for posting critical comments about the dealership and pictures of an accident that occurred on a nearby dealership’s lot (that happened to be owned by the same people).

Due to the huge increase in social media use by the general population as a form of communication, The National Labor Relation Board is aggressively going after companies that terminate employees for issues in regards to social media use. Until now, there seemed to be no rhyme or reason to which cases they were supporting and which they weren’t. The information was there, but unless you were actively seeking these cases, chances are you wouldn’t find them.

In an effort to coordinate the prosecution of cases involving social media, Anne Purcell, Associate General Counsel for the National Labor Relations Board, wrote and released a 24 page report on August 18, 2011 summarizing cases involving social media and explaining why they have chosen to prosecute (or not) these cases. In doing so, they’ve given insight into what you can and can’t do as an employer including what they believe your social media policy should (or shouldn’t) say.

Keep in mind that this is a summary of the cases and issues that they’ve determined merit prosecution. While some of the cases have been settled, many of these cases have trials pending. In no way are these laws or precedents…yet. However, in knowing what they do and don’t consider valid complaints, it can help any employer construct a more solid social media policy that would, at the very least, withstand the scrutiny of the National Labor Relations Board. It also gives insight into what, if any, disciplinary action you can take against an employee in regards to social media use.

In summary, based on the collective summaries of the cases, here are some guidelines I’ve extrapolated from the report for your social media policies and disciplinary considerations:

They’re huge on protected concerted activity. Employees can discuss and criticize their employer, supervisors and co-workers as long as they don’t stand alone in their criticisms. Your employees can call you a “scumbag”, an “a-hole”, a “super mega puta” or whatever else as long as they have co-workers that share their opinion. They have the right to discuss working conditions and their employer anywhere, including via social media. The keyword here is that it must be a discussion. Personal gripes don’t count.

You can’t have overly-broad social media policies. Things you can’t include in your social media policies:

Prohibit employees from making negative comments about the company, their supervisors or their co-workers.
Posting pictures of themselves which depict the company in any way (ie. in uniform, on the job, etc.)
Prohibit them from using inappropriate, offensive or rude language in regards to a coworker, the company, or a customer.
Prohibit inappropriate discussions via blogs.
Prohibit employees from discussing company business on their own time on their personal accounts.
Prohibit employees from disclosing inappropriate or sensitive information about the company.
Prohibit employees from posting pictures or comments involving the company or its employees that would be considered inappropriate.
Prohibit employees from using the company name, address, or other company information on their personal profiles.
Prohibit employees from using the company’s logo or photographs of the company’s store.

How many of these does your company have in its social media policy?

I bet quite a few. You’re probably thinking “Holy Cow” about now. Seems as if employees can do anything they want! That’s not true. What IS true is this: these company’s social media policies (when they had them) contained restrictions that were overly broad and encompassing. Employees have a right to bitch about their workplace, bosses and company, whether it’s aloud or via any type of social media, including Facebook, Twitter or blogging. It doesn’t matter whether you have an “At-Will Employment Agreement”.

So how do you restrict your employee’s social media use through policy without it being considered overly-broad? I mean, come on, you can’t account for EVERY possible situation in a written policy.

The answer is actually quite simple. Your policy is overly broad and/or unlawful if it does not contain verbiage that excludes protected concerted activity as defined by Sections 7 and 8 of the National Labor Relations Act. Simply putting a phrase similar to that into your social media policy should protect you in most instances (unless, of course, the activity IS protected).

In addition, when considering whether you can or can’t terminate an employee because of something they posted on social media, you need to ask yourself these questions:

Is this comment posted relating to any form of work conditions?
Is it a shared opinion and/or being discussed with fellow co-workers?

If the answer is yes, I would think twice before disciplining the employee. If the answer is no, you’re probably safe.

This has nothing to do with free speech. It has everything to do with creating policies that would INCLUDE protected concerted activities. To make it short (and provide an example of their reasoning), you can’t tell an employee they can’t post photos or use the company logo on social media without permission because that would include prohibiting the employees from posting photos of them on a picket line in front of your dealership. You can’t simply tell them they cannot talk about the company via social media because that would prohibit them from lawfully discussing working conditions with their co-workers.

Moral of the story: If you’re an employer, make sure your policy excludes protected activity. If you’re an employee, make sure your co-workers agree with you (and chime in).

Disclaimer: The author of this post is not an attorney and in no way should this be considered legal advice.

(Originally published on Dealer magazine)

Dealers In California May Be Forced To Change The Way Salespeople Are Paid

July 29, 2011 By Arnold Tijerina

In a class action lawsuit filed on June 21, 2011 against AutoNation (Santa Clara Superior Court, entitled Lilly v. AutoNation, Case No. 1-11-CV-203569), attorneys are claiming that AutoNation is in violation of the California Labor Code by misclassifying commissioned sales reps as exempt from overtime and, in addition, issuing deduct vouchers post-sale for losses in commissionable gross due to repair or service costs incurred.

It’s standard practice in California to consider minimum wage as a “draw” against commissions. This hourly wage is only paid if the salesperson’s commissions for any pay period are less than commissions earned (ie. they would get the higher of the two amounts – commissions or hourly wages). Many dealers “settle up” at month end with the salespeople meaning the view the commissions/hourly wages on a monthly basis (versus a pay period). California labor law mandates that overtime be paid for any hours over 8 in a DAY, not by 40 hours in a week. (ie. If I worked 12 hours the whole week but all in one day, I would be due 4 hours overtime even though I only worked one day that week.)

We all know that salespeople work A LOT especially hungry ones. Many salespeople who aren’t making a ton of commissions will make sure they work a lot of hours to insure that they get a decent check in the first place. Of course a salesperson that is getting paid hourly too many times has a short lifespan within a dealership.

Now onto the deduct vouchers. Dealers in California pay commissions in one of two ways: upon approval, or upon funding. Most dealers pay upon approval. This is designed so that salespeople don’t have to wait forever to earn their paychecks and dealers don’t have to cough up minimum wage while the salesperson has unpaid commission vouchers pending funding. It’s also pretty common that grosses decrease post-sale for many reasons: a dealer has trouble with funding and/or has multiple approvals, spot-deliveries based solely upon credit, repairs and due bills completed post-sale, unforeseen bank fees, option contracts cashed in, back-end product cancellations, etc.

Typically, since vouchers are issued upon approval, those vouchers are issued based upon the gross at the time of delivery and/or approval and included in the salesperson’s check for the next pay period. If dealers cannot issue deduct vouchers for loss in gross, this will force dealers to restructure pay plans as something that was spot-delivered with a high front-end gross that gets cut back due to financing issues or any of the other reasons mentioned above, could go from a nice voucher for the salesperson to a mini. If the dealer continued to pay in the way that they are now, and could not issue deduct vouchers, they would risk losing money by issuing commission vouchers prematurely.

Then you have to consider that a sales manager would be forced to structure the deal differently taking into consideration potential cut-backs to take into account the future inability to issue a voucher. The only way to structure a new pay plan without risk to the dealer would be to issue the voucher upon funding which would open the dealer up to the possibility of having to pay the salesperson hourly wages (including overtime), while the salesperson had unissued commission vouchers pending funding. A salesperson who knew how to game the system and/or a passive F&I manager could further complicate things while awaiting stipulations from the customer.

In any case, dealers in California need to watch this pending litigation carefully as it could have a great impact on how they compensate their sales staff and, if the lawsuit is successful, would open up ALL dealers in California to future lawsuits for the same reason.

Right now, AutoNation is the only target, but your dealership could be next.

(Originally published July 22, 2011 on Dealer magazine)

If You Could Only Make Front-End Profit, Could You Stay In Business?

June 12, 2011 By Arnold Tijerina

(Originally published on Dealer magazine)

You may be forced to find out.

How many less cars would you sell if you couldn’t spot deliver cars?

What if you couldn’t add negative equity into a transaction?

What if you couldn’t make any reserve money on the financing?

What if the mark-up on back-end products was regulated?

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). This legislation gave the Federal Trade Commission the authorization to regulate, in essence, how car dealers do business by defining “unfair or deceptive acts or practices by motor vehicle dealers.” It seems now the FTC is moving towards defining, and enforcing this.

On March 15, 2011, the FTC announced the start of a series of public round roundtables in which they are seeking “data and empirical evidence” to begin deciding in what way, and how, to regulate car dealers.

The question isn’t whether they will, it is in what way. The FTC is a consumer protection organization. “Unfair and Deceptive” are certainly subjective terms which mean different things to car dealers than they do to consumers.

In the roundtables, some of the questions they want feedback, data and evidence on are very telling on how they view the practices of dealers. The mere fact that they are asking the questions at all leads me to believe that they already have some idea of the answer and just want confirmation (or the opposite) of their views.

So let’s go on a jaunt holding hands with the FTC while they explore, and decide, the fate of your store’s profit.

Q: Do motor vehicle dealers engage in “yo-yo financing”?

This question is obviously talking about spot-delivering customers and then having to re-write them. The definition they use in the footnotes defining “yo-yo financing” pretty much alludes that dealers intentionally do this and focuses on instances in which the actual secured financing increases interest rates and/or elevates monthly payments. If the FTC is asking whether consumers believe this is an unfair or deceptive practice, someone believes it is. If the FTC decides to regulate rewrites, which is the natural solution in protecting the consumer, the response by a dealer will have to be to cease spot deliveries. It’s hard to believe that they will prevent dealers from offering consumers more favorable terms after delivery so my guess is that regulation would be limited to instances in which terms are less favorable. What’s less favorable though? The question focuses on two components: higher interest rates and higher monthly payments. There are many facets of any deal that could cause either of these things to occur. Shortening the term of the loan would increase monthly payments. Will that be considered “unfair and deceptive”? I’m sure you can see how their definition immediately impacts how, and to whom, you spot deliver a car (or if you do at all). This changes how you desk a deal even. If you know that you can’t spot deliver a vehicle unless you can pretty much guarantee that you won’t have to re-write them unless the terms are more favorable to them, you are forced to offer WORSE deals up front, in the box. This just makes deals harder to close. How many sales would you lose from customers that cool off between the time you would have spot delivered them and the time you actually get an approval and are able to complete the delivery?

Q: Do finance companies provide incentives or payments to motor vehicle dealers in exchange for consumers receiving more expensive credit? Do motor vehicle dealers charge interest rate markups..for credit or leases about which consumers are unaware?

Yes. It’s called reserve and, apparently it’s being considered as an unfair or deceptive practice. I highly doubt most consumers are aware that dealer-secured financing isn’t always at the “buy-rate” and that dealerships can make money by marking up the interest rate. Sure, we can justify it a lot of ways but the bottom line is that if consumers believe it’s unfair, and the FTC agrees, dealers could lose the ability to make reserve. How does this affect how you sell a car, work a deal, or determine the selling price discount you would offer to a customer?

Q: Is substantial negative equity from a prior purchase, or money owed on a prior lease, frequently rolled into consumers’ next vehicle purchases or leases?

I highly doubt that the FTC will remove a dealer’s ability to roll negative equity for several reasons: banks already monitor and regulate loan-to-value and limit the amount of negative equity they will accept. What I do think could happen though is that the FTC could limit theamount of negative equity a person could roll into a new loan or lease regardless of the purchase price, loan structure or bank criteria. What if the maximum you could roll into a deal is $5000? $4000? Does it make a difference in how much your car costs? Will some makes get an advantage over others if the amount is regulated (versus a percentage)? How they choose to do this and/or determine this will absolutely effect how a deal is structured and/or if it happens at all.

Q: Do motor vehicle dealers engage in credit or lease packing, such as by including amounts for credit insurance, guaranteed automobile protection (GAP) or other add-ons into payment amounts?

I thought this was addressed by the single document rules but, apparently, the FTC is investigating this as well. They also want to investigate and consider the mark-ups allowed on these products thus limiting the price at which you could sell them. What’s a fair markup? Do you think your answer would match a consumer’s answer to that question?

These are just four of the 14 questions (each of which have multiple parts) that the FTC will be considering at the roundtables. I actually counted each question and sub question being considered and there are 72 questions that encompass a huge range of topics including: discriminatory financing offers on the dealer level, financing military personnel, paying off liens or trade-ins, the use of GPS devices on financed vehicles, vehicle auction houses, and more.

The first roundtable is scheduled for April 12, 2011 in Detroit, MI. They say there will be a total of 4 roundtables disbursed around the country but the other ones haven’t been announced yet. Given the chance, I’d love to be a part of one of those roundtables as a fly-on-the-wall.

To read the whole text of the announcement and all the questions that will be posed to the public, visit this link. Just the URL name alone (that’s not anywhere in the document) should give you an idea where this is headed: AutoTaskForce

The Case Of The $30 Million Rims

June 11, 2011 By Arnold Tijerina

(Originally published at Dealer magazine)

Last week, a California Court of Appeals judge determined that a dealer violated several California state laws and ruled in favor of the plaintiff in a class-action lawsuit that will have huge ramifications for dealers within the state. The ruling was the result of some poor decisions from start to finish. Ultimately, this ruling will allow 1,500 car buyers the right to have their purchase contracts rescinded, which is estimated to potentially cost the dealership upwards of $30 million.

The story began in 2004 when Reginald Nelson purchased a vehicle from Pearson Ford (now Kearny Pearson Ford) in San Diego, CA. The car cost $9,995 and was spot-delivered without financing being secured. The customer also did not have existing auto insurance, so a binder was purchased for $250. This was added to the purchase price of the vehicle as well as some rims that were promised the customer. The insurance binder was on a “due bill,” but it is unclear whether the rims were. (My guess is that the rims were initially on a due bill but, once the approval came through, either the profit was reduced or the structure didn’t meet the approval’s financing restrictions. So, to keep the car on the road, the rims were taken out of the deal.) Six days later, the dealership contacted Reginald asking him to return to the dealership to fill out more paperwork. The paperwork reflected a change in the financing terms per the actual approval received by the dealership and was dated the date the vehicle was spot-delivered. Mr. Nelson signed the new contracts.

In interviews with Mr. Nelson, he says that he repeatedly tried to get the rims he was promised by the dealership but the dealership would not give them to him. Eventually, this led Mr. Nelson to contact an attorney. Unfortunately for the dealer, he contacted Hal Rosner, a consumer-advocate and auto law expert attorney specializing in automobile transactions and dealerships.

Mr. Rosner immediately identified several things that the dealership did that were not in compliance with state laws:

1. The second contract was backdated to the date Mr. Nelson took delivery of the vehicle, not the date in which he signed the new contract.

2. The insurance binder was added to the price of the vehicle, not itemized separately on the contract.

Both of these are violations of the state’s one document rule. Through discovery, Mr. Rosner was able to determine that these violations had occurred many times at this dealership. The 1,500 occurrences that Pearson Ford manipulated were all illegal. “That’s more than once a day for five years that they’re telling people, ‘We gave you the wrong financials,’”said Rosner. “That’s hardly an accident.” Rosner was able to get the lawsuit converted into a class-action in March 2007.

Prior to the class-action trial, Pearson Ford made a settlement offer of $500,000 which was accepted. After the settlement was approved, both sides asked for their attorney’s fees to be paid by the opposing party. The trial court awarded attorney’s fees to Mr. Nelson and denied them to Pearson Ford. Upon further review, the judgment was vacated and trial moved forward.

The initial trial court found no violation save for a “technical violation” and awarded restitution in the amount of $50 per class member ($75,000). Both parties disagreed with the ruling (for different reasons) and it was taken to the California State Court of Appeals.

The California State Court of Appeals found that both actions described above were, in fact, violations of the Automomobile Sales Finance Act, the Unfair Competition Law and the Consumers Legal Remedies Act by backdating the contract and including the insurance in the cost of the vehicle, effectively costing Mr. Nelson an additional $27 in interest plus the sales tax on the $250 insurance binder wrapped into the vehicle purchase price (then approximately $19). This ruling effectively will give the 1,500 class members the right to have their contracts rescinded.

Keep in mind that these contracts are at least 7 years old, some much older. Assuming some of these vehicles were used at the time of purchase, this dealership will have to buy back contracts IN FULL for vehicles that could be 10+ years old.

I personally know that the practice of backdating contracts is common in Cailfornia, as is wrapping in insurance into the purchase price. In the past 3 years or so, dealers have slowly been changing those practices, but this ruling sets a dangerous precedent. I’m sure there are plenty of civil attorneys itching to get their hands on a consumer with a backdated contract right now.

This story started as a credit challenged consumer, with no car insurance, that wanted some rims for the 1998 Infiniti I30 that he bought from the dealer. This vehicle was already 6 years old when he purchased it. Had the dealer honored their promise to the consumer and given him his rims, legal action probably would never have happened. Once legal action happened, the dealer argued against paying the plaintiff’s attorney’s fees on top of an accepted settlement offer.

Those rims and $46 ultimately put the dealership on the hook for an estimated $30 million.

Those have got to be the most expensive rims in history.

Click here for ABC news 10 story: Pearson Ford Ordered to Buy Back Over 1,500 Vehicles

Click here for a Copy of Appeal Court Ruling

NLRB Files Complaint Against Luxury Car Dealership For Unlawful Termination Over Employee’s FB Post

May 24, 2011 By Arnold Tijerina

On Friday, May 20, 2011, the National Labor Relations Board filed a complaint against a luxury car dealership in Lake Bluff, IL for “unlawfully discharging a car salesperson because of his Facebook posting concerning the dealership’s handling of a sales event which could impact his earnings.”

The complaint was filed out of the NLRB Office Region 13 Chicago. I contacted Regional Director James Barker who indicated that a formal press release will be issued in the next day or so in regards to this complaint.

I spoke with legal counsel for the dealership, James Hendricks, seeking more information about the case. While he couldn’t get too specific as they are taking this to trial, he was able to give me a brief summary of the facts regarding the case. When asked what the salesperson posted on Facebook that is involved in this complaint, Mr. Hendricks indicated to me that the salesperson posted a picture of an accident involving another salesperson while on a test drive with a customer that occurred at an adjacent dealership owned by the same company as the one he was employed by.

Mr. Hendricks’ position is that the employee in question was not terminated for that action (posting on Facebook) but for different reasons.

“We advise all of our dealer clients to have a social media policy in place that contains a disclaimer that nothing within their policy is meant to violate the employee’s section 7 rights under the National Labor Relations Act”, said Mr. Hendricks. Section 7 is the core of the NLRA as it defines protected activity including employees’ right to organize, take part in grievances, protests and strikes.

There is very little information available as of now but this is certainly something dealerships should be watching. The National Labor Relations Board has recently begun taking an active interest in employers in regards to terminations and disciplinary actions taken against employees, most recently including an April 27, 2011 settlement by the NLRB with build.com and a February 8, 2011 settlement with American Medical Response of Connecticut, Inc. both of which involved employees being terminated due to Facebook posts that were made. In both of those cases, it was determined by the NLRB that the activity was protected activity since the employees were discussing workplace conditions with fellow co-workers.

There have been plenty of cases in which terminations related to social media activity by employees were upheld by various legal entities. The fact that the NLRB seems to feel that this activity (posting photos of an accident that occurred at your workplace by a co-worker which involved a customer) is protected in some way will be something we need to watch. The trial date is set for July 21, 2011.

UPDATE: After breaking the news on this matter on Dealer magazine, new information was brought to my attention. I re-contacted the dealership’s attorney to clarify facts in this case. According to the attorney, the NLRB’s position is that the employee was terminated due to posting a comment on Facebook relating to what he considered poor quality food and beverages offered to dealership customers at a sales event, however, the dealership’s position is that the employee was terminated due to the posting of the photograph which I described earlier.

(Article mentioned by Dave Jamieson of the Huffington Post).