Amended in Assembly May 4, 2015

Amended in Assembly March 23, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 287


Introduced by Assembly Members Gordon, Eggman, and Mark Stone

(Principal coauthor: Assembly Member Wilk)

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(Coauthor: Assembly Member Jones)

end delete
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(Coauthors: Assembly Members Dababneh, Dodd, Jones, and Lackey)

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February 11, 2015


An act to amend Sections 3050, 3066, 4751, and 11713.3 of, to add Section 3065.2 to, and to add Article 1.1 (commencing with Section 11750) to Chapter 4 of Division 5 of, the Vehicle Code, relating to vehicle safety.

LEGISLATIVE COUNSEL’S DIGEST

AB 287, as amended, Gordon. Vehicle safety: recalls.

Existing law generally regulates the transfer and registration of motor vehicles. Existing federal law requires a motor vehicle manufacturer to notify the owner or purchaser of a motor vehicle when the manufacturer determines that the vehicle contains a safety-related defect or when the manufacturer is ordered by the federal Secretary of Transportation to notify vehicle owners and purchasers that a vehicle has a safety-related defect. Existing federal law also prohibits a motor vehicle dealer from selling a vehicle if it has been notified of a safety-related defect by the manufacturer, except as specified.

This bill would enact the Consumer Automotive Recall Safety Act, which would be operative on and after July 1, 2016. The act would require a vehicle manufacturer to display notifications of Stop Sale - Stop Drive recalls, as defined, on the manufacturer’s Internet Web site. The act would require a vehicle manufacturer to provide a rental or loaner car for a consumer who seeks to have a vehicle repaired because of abegin delete recall, andend deletebegin insert recall butend insert the parts or procedures are not yet available to perform the repair. The act would also require a vehicle manufacturer to compensate its franchisees, as specified, for costs incurred in providing a loaner or rental car and storing a consumer’s vehicle that is subject to recall if the parts or procedures are not yet available to perform the repair.

The act would prohibit a vehicle dealer from displaying or offering for sale at retail a used vehicle, unless the dealer has obtained a recall database report within 30 days of the display or offer. The act would prohibit a vehicle dealer from selling or leasing a vehicle at retail if the used vehiclebegin delete that hasend deletebegin insert is subject toend insert a Stop Sale - Stop Drivebegin delete recallend deletebegin insert recall,end insert until the recalled vehicle has been repaired, subject to exception. The act would prohibit a rental car company frombegin delete offering a vehicle for rent unless the company has obtained a recall database report within 30 days of the offer. The act would prohibit a rental car company from renting a vehicle that has a Stop Sale - Stop Drive recallend deletebegin insert renting a vehicle that is subject to a recall,end insert until the recalled vehicle has been repaired,begin delete subject to exception.end deletebegin insert as specified.end insert By creating new prohibitions, the violation of which would be a crime under existing law, this bill would impose a state-mandated local program.

Existing law establishes the New Motor Vehicle Board in the Department of Motor Vehicles, and requires the board to hear and decide certain protests presented by a motor vehicle franchisee in regard to a dispute with the vehicle manufacturer.

This bill would, commencing July 1, 2016, authorize the board to hear and decide protests by franchisees regarding payments for providing a loaner or rental car and storing a consumer’s vehicle subject to recall if the parts or procedures are not yet available to perform the repair. The bill would make additional conforming changes.

Existing law prescribes certain instances when the Department of Motor Vehicles may refuse registration, or renewal or transfer of registration, of a vehicle, including, among others, if the applicant has failed to furnish the department with an odometer disclosure statement, as specified.

This bill would additionally authorize the department, commencing July 1, 2016, to refuse registration, or renewal or transfer of registration, of a vehicle if the applicant has failed to furnish the department with a recall disclosure statement, as defined.

Under existing law, a vehicle manufacturer, manufacturer branch, distributor, and distributor branch are prohibited from engaging in specified practices. Existing law makes a violation of these prohibitions a crime.

This bill would, commencing July 1, 2016, include within those prohibited practices, unfairly discriminating among franchisees with respect to reimbursement for costs incurred in providing a loaner or rental car and storing a consumer’s vehicle that is subject to recall if the parts or procedures are not yet available to perform the repair. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

The bill would state findings and declarations of the Legislature relative to vehicle recalls.

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:

P3    1

SECTION 1.  

(a) The Legislature finds and declares all of the
2following:

3(1) Over the past one-half decade, automakers and the National
4Highway Traffic Safety Administration have issued more recalls
5on new and used motor vehicles than ever before. The year 2014
6set the record for the most recalls on vehicles in United States
7history with over 63.8 million vehicles recalled. The rate of vehicle
8recalls has exponentially grown over this past one-half decade as
922 million recalls were issued in 2013 and 16.2 million were issued
10in 2012. The increase of recalls in 2014 is a 190 percent increase
11from 2013 and a 293.8 percent increase from 2012.

12(2) While federal motor vehicle safety standards are more
13demanding now than at any other point in time and new vehicles
14sold today are the safest in history, the exponential growth of
15recalls issued on motor vehicles has caused confusion and apathy
P4    1for far too many Californians. According to the National Highway
2Traffic Safety Administration andbegin delete othersend deletebegin insert others,end insert about one-third
3of all recalled vehicles are never repaired by the vehicle’s owner.

4(3) Federal regulations now require most vehicle manufacturers
5to provide motor vehicle safety recall information applicable to
6the vehicles they manufacture on the Internet andbegin delete availableend delete to the
7public. Dealers, rental car companies, and private parties offering
8vehicles for sale or rent now have greater access to recall
9information than ever before.

10(4) Federal law imposes a requirement not to sell a new vehicle
11subject to a recall, but neither federal nor California law addresses
12used vehicles subject to a recall. It is the intent of this act to address
13used vehicles subject to a recall that are not yet repaired.

14(b) Accordingly, it is the intent of the Legislature in enacting
15this act to increase consumer awareness of recalls in the car
16purchasing and rental process, to ensure that consumers have access
17to loaner and rental vehicles while their recalled vehicles are being
18repaired at a new motor vehicle dealer, and to ensure that a recalled
19vehicle that poses a risk of imminent harm is not sold or rented to
20Californians until the risk is removed and the vehicle is repaired.

21(c) The Legislature further finds and declares all of the
22following:

23(1) The distribution, sale, and service of new motor vehicles in
24the State of California vitally affects the general economy of this
25state and the public welfare.

26(2) The new motor vehicle franchise system, which operates
27within a strictly defined and highly regulated statutory scheme,
28assures the consuming public of a well-organized distribution
29system for the availability and sale of new motor vehicles
30throughout the state, provides a network of quality warranty, recall,
31and repair facilities to maintain those vehicles, and creates a
32cost-effective method for the state to police those systems through
33the licensing and regulation of private sector franchisors and
34franchisees.

35(3) Franchisors sometimes establish programs to reimburse
36 franchisees for loaner or rental cars given to consumers whose
37vehicles have been recalled, but California franchise laws fail to
38establish guidelines for rental or loaner vehicle reimbursement.

39(4) California franchise laws require manufacturers to provide
40reasonable reimbursement to dealers for warranty and recall work,
P5    1but fails to establish guidelines for compensating franchisee costs
2associated with recalled vehicles that cannot be repaired and remain
3in the franchisee’s possession.

4(d) Accordingly, it is the intent of the Legislature in enacting
5this act to ensure that new motor vehicle dealer franchisees are
6treated fairly by their franchisors, that new motor vehicle dealer
7franchisees are reasonably reimbursed for providing loaner or
8rental vehicles to consumers who have recalled vehicles when the
9parts or procedures to make the recall repair are not available, and
10that new motor vehicle dealer franchisees are reasonably
11compensated for recalled vehicles at their dealerships that cannot
12immediately be repaired and must be stored by the franchisee at
13the dealership.

14

SEC. 2.  

Section 3050 of the Vehicle Code is amended to read:

15

3050.  

The board shall do all of the following:

16(a) Adopt rules and regulations in accordance with Chapter 3.5
17(commencing with Section 11340) of Part 1 of Division 3 of Title
182 of the Government Code governing those matters that are
19specifically committed to its jurisdiction.

20(b) Hear and determine, within the limitations and in accordance
21with the procedure provided, an appeal presented by an applicant
22for, or holder of, a license as a new motor vehicle dealer,
23manufacturer, manufacturer branch, distributor, distributor branch,
24or representative when the applicant or licensee submits an appeal
25provided for in this chapter from a decision arising out of the
26department.

27(c) Consider any matter concerning the activities or practices
28of any person applying for or holding a license as a new motor
29vehicle dealer, manufacturer, manufacturer branch, distributor,
30distributor branch, or representative pursuant to Chapter 4
31(commencing with Section 11700) of Division 5 submitted by any
32person. A member of the board who is a new motor vehicle dealer
33may not participate in, hear, comment, advise other members upon,
34or decide any matter considered by the board pursuant to this
35subdivision that involves a dispute between a franchisee and
36franchisor. After that consideration, the board may do any one or
37any combination of the following:

38(1) Direct the department to conduct investigation of matters
39that the board deems reasonable, and make a written report on the
P6    1results of the investigation to the board within the time specified
2by the board.

3(2) Undertake to mediate, arbitrate, or otherwise resolve any
4honest difference of opinion or viewpoint existing between any
5member of the public and any new motor vehicle dealer,
6manufacturer, manufacturer branch, distributor, distributor branch,
7or representative.

8(3) Order the department to exercise any and all authority or
9power that the department may have with respect to the issuance,
10renewal, refusal to renew, suspension, or revocation of the license
11of any new motor vehicle dealer, manufacturer, manufacturer
12branch, distributor, distributor branch, or representative as that
13license is required under Chapter 4 (commencing with Section
1411700) of Division 5.

15(d) Hear and decide, within the limitations and in accordance
16with the procedure provided, a protest presented by a franchisee
17pursuant to Section 3060, 3062, 3064, 3065, 3065.1, 3065.2, 3070,
183072, 3074, 3075, or 3076. A member of the board who is a new
19motor vehicle dealer may not participate in, hear, comment, advise
20other members upon, or decide, any matter involving a protest
21filed pursuant to Article 4 (commencing with Section 3060), unless
22all parties to the protest stipulate otherwise.

23(e) Notwithstanding subdivisions (c) and (d), the courts have
24jurisdiction over all common law and statutory claims originally
25cognizable in the courts. For those claims, a party may initiate an
26action directly in any court of competent jurisdiction.

27

SEC. 3.  

Section 3065.2 is added to the Vehicle Code, to read:

28

3065.2.  

(a) A claim made by a franchisee for payment under
29Section 11760 shall be either approved or disapproved within 30
30days after receipt by the franchisor. When a claim is disapproved,
31the franchisee who submits it shall be notified in writing of its
32disapproval within the required period, and each notice shall state
33the specific grounds upon which the disapproval is based. Any
34claim not specifically disapproved in writing within 30 days from
35receipt shall be deemed approved on the 30th day.

36(b) Franchisee claims for compensation under Section 11760
37shall not be disapproved unless the claim is false or fraudulent,
38the claim is ineligible under the statute, or for material
39noncompliance with reasonable and nondiscriminatory
P7    1requirements of the franchisor, including documentation and
2administrative claims submission requirements.

3(c) The franchisor shall provide a reasonable appeal process
4allowing the franchisee at least 30 days after receipt of the written
5disapproval notice to respond to any disapproval with additional
6supporting documentation or information rebutting the disapproval.
7If disapproval is based upon noncompliance with documentation
8or administrative claims submission requirements, the franchisor
9shall allow the franchisee at least 30 days from the date of receipt
10of the written disapproval notice to cure any material
11noncompliance. If the disapproval is rebutted, and material
12noncompliance is cured before the applicable deadline, the
13franchisor shall approve the claim.

14(d) If the franchisee provides additional supporting
15documentation or information purporting to rebut the disapproval,
16attempts to cure noncompliance relating to the claim, or otherwise
17appeals denial of the claim, and the franchisor continues to deny
18the claim, the franchisor shall provide the franchisee with a written
19notification of the final denial within 30 days of completion of the
20appeal process, which shall conspicuously state “Final Denial” on
21the first page.

22(e) Following the disapproval of a claim, a franchisee shall have
23six months from receipt of the written notice described in either
24subdivision (a) or (d), whichever is later, to file a protest with the
25board for determination of whether the franchisor complied with
26subdivisions (a), (b), (c), and (d). In any hearing pursuant to this
27subdivision or subdivision (a), (b), (c), or (d), the franchisor shall
28have the burden of proof.

29(f) A claim made by franchisees under this section shall be paid
30within 30 days following approval. Failure to approve or pay within
31the time limits specified in this section, in individual instances for
32reasons beyond the reasonable control of the franchisor, is not a
33violation of this section.

34(g) (1) Audits of franchisee records for payment under Section
3511760 may be conducted by the franchisor on a reasonable basis,
36and for a period of nine months after a claim is paid or credit
37issued. A franchisor shall not select a franchisee for an audit, or
38perform an audit, in a punitive, retaliatory, or unfairly
39discriminatory manner. A franchisor may conduct no more than
40one random audit of a franchisee in a nine-month period. The
P8    1franchisor’s notification to the franchisee of any additional audit
2within a nine-month period shall be accompanied by written
3disclosure of the basis for that additional audit.

4(2) Previously approved claims shall not be disapproved and
5charged back unless the claim is false or fraudulent, the claim is
6ineligible under the statute, or for material noncompliance with
7reasonable and nondiscriminatory requirements of the franchisor,
8including documentation and administrative claims submission
9requirements. A franchisor shall not disapprove a claim or
10begin delete chargebackend deletebegin insert charge backend insert a claim based upon an extrapolation from
11a sample of claims, unless the sample of claims is selected
12randomly and the extrapolation is performed in a reasonable and
13statistically valid manner.

14(3) If the franchisor disapproves of a previously approved claim
15following an audit, the franchisor shall provide to the franchisee,
16within 30 days after the audit, a written disapproval notice stating
17the specific grounds upon which the claim is disapproved. The
18franchisor shall provide a reasonable appeal process allowing the
19franchisee a reasonable period of not less than 30 days after receipt
20of the written disapproval notice to respond to any disapproval
21with additional supporting documentation or information rebutting
22the disapproval and to cure any material noncompliance, with the
23period to be commensurate with the volume of claims under
24consideration. If the franchisee rebuts any disapproval and cures
25any material noncompliance relating to a claim before the
26applicable deadline, the franchisor shall notbegin delete chargebackend deletebegin insert charge
27backend insert
the franchisee for that claim.

28(4) If the franchisee provides additional supporting
29documentation or information purporting to rebut the disapproval,
30attempts to cure noncompliance relating to the claim, or otherwise
31appeals denial of the claim, and the franchisor continues to deny
32the claim, the franchisor shall provide the franchisee with a written
33notification of the final denial within 30 days of completion of the
34appeal process, which shall conspicuously state “Final Denial” on
35the first page.

36(5) The franchisor shall notbegin delete chargebackend deletebegin insert charge backend insert the
37franchisee until 45 days after the franchisee receives the written
38notice described in paragraph (3) or (4), whichever is later. If the
39franchisee cures any material noncompliance relating to a claim,
40the franchisor shall notbegin delete chargebackend deletebegin insert charge backend insert the dealer for that
P9    1claim. Any chargeback to a franchiseebegin delete forend delete under Section 11760
2shall be made within 90 days after the franchisee receives that
3written notice. If the board sustains the chargeback or the protest
4is dismissed, the franchisor shall have 90 days following issuance
5of the final order or the dismissal to make the chargeback, unless
6otherwise provided in a settlement agreement.

7(6) Within six months after receipt of the written notice
8described in either paragraph (3) or (4), a franchisee may file a
9protest with the board for determination of whether the franchisor
10complied with this subdivision. If the franchisee files a protest
11pursuant to this subdivision prior to the franchisor’s chargeback
12for denied claims, the franchisor shall not offset or otherwise
13undertake to collect the chargeback until the board issues a final
14order on the protest. In any protest pursuant to this subdivision,
15the franchisor shall have the burden of proof.

16(h) If a false claim was submitted by a franchisee with the intent
17to defraud the franchisor, a longer period for audit and any resulting
18chargeback may be permitted if the franchisor obtains an order
19from the board.

20(i) This section shall become operative on July 1, 2016.

21

SEC. 4.  

Section 3066 of the Vehicle Code is amended to read:

22

3066.  

(a) Upon receiving a protest pursuant to Section 3060,
233062, 3064, 3065, 3065.1, 3065.2, 3070, 3072, 3074, 3075, or
243076, the board shall fix a time within 60 days of the order, and
25place of hearing, and shall send by registered mail a copy of the
26order to the franchisor, the protesting franchisee, and all individuals
27and groups that have requested notification by the board of protests
28and decisions of the board. Except in a case involving a franchisee
29who deals exclusively in motorcycles, the board or its executive
30director may, upon a showing of good cause, accelerate or postpone
31the date initially established for a hearing, but the hearing may not
32be rescheduled more than 90 days after the board’s initial order.
33For the purpose of accelerating or postponing a hearing date, “good
34cause” includes, but is not limited to, the effects upon, and any
35irreparable harm to, the parties or interested persons or groups if
36the request for a change in hearing date is not granted. The board
37or an administrative law judge designated by the board shall hear
38and consider the oral and documented evidence introduced by the
39parties and other interested individuals and groups, and the board
40shall make its decision solely on the record so made. Chapter 4.5
P10   1(commencing with Section 11400) of Part 1 of Division 3 of Title
22 of the Government Code and Sections 11507.3, 11507.6, 11507.7,
311511, 11511.5, 11513, 11514, 11515, and 11517 of the
4Government Code apply to these proceedings.

5(b) In a hearing on a protest filed pursuant to Section 3060,
63062, 3070, or 3072, the franchisor shall have the burden of proof
7to establish that there is good cause to modify, replace, terminate,
8or refuse to continue a franchise. The franchisee shall have the
9burden of proof to establish that there is good cause not to enter
10into a franchise establishing or relocating an additional motor
11vehicle dealership.

12(c) Except as otherwise provided in this chapter, in a hearing
13on a protest alleging a violation of, or filed pursuant to, Section
143064, 3065, 3065.1, 3065.2, 3074, 3075, or 3076, the franchisee
15shall have the burden of proof, but the franchisor has the burden
16of proof to establish that a franchisee acted with intent to defraud
17the franchisor when that issue is material to a protest filed pursuant
18to Section 3065, 3065.1, 3065.2, 3075, or 3076.

19(d) A member of the board who is a new motor vehicle dealer
20may not participate in, hear, comment, or advise other members
21upon, or decide, a matter involving a protest filed pursuant to this
22article unless all parties to the protest stipulate otherwise.

23

SEC. 5.  

Section 4751 of the Vehicle Code is amended to read:

24

4751.  

The department may refuse registration, or the renewal
25or transfer of registration, of a vehicle in any of the following
26events:

27(a) If the department is not satisfied that the applicant is entitled
28thereto under this code.

29(b) If the applicant has failed to furnish the department with
30information required in the application or reasonable additional
31information required by the department.

32(c) If the department determines that the applicant has made or
33permitted unlawful use of any registration certificate, certificate
34of ownership, or license plates.

35(d) If the vehicle is mechanically unfit or unsafe to be operated
36or moved on the highways.

37(e) If the department determines that a manufacturer or dealer
38has failed during the current or previous year to comply with the
39provisions of this code relating to the giving of notice to the
P11   1department of the transfer of a vehicle during the current or
2previous year.

3(f) If the department determines that a lien exists, pursuant to
4Section 9800, against one or more other vehicles in which the
5applicant has an ownership interest.

6(g) If the applicant has failed to furnish the department with an
7odometer disclosure statement pursuant to subsection (a) of Section
832705 of Title 49 of the United States Code.

9(h) Commencing July 1, 2016, if the applicant has failed to
10 furnish the department with a recall disclosure statement pursuant
11to Section 11758.

12

SEC. 6.  

Section 11713.3 of the Vehicle Code is amended to
13read:

14

11713.3.  

It is unlawful and a violation of this code for a
15manufacturer, manufacturer branch, distributor, or distributor
16branch licensed pursuant to this code to do, directly or indirectly
17through an affiliate, any of the following:

18(a) To refuse or fail to deliver in reasonable quantities and within
19a reasonable time after receipt of an order from a dealer having a
20franchise for the retail sale of a new vehicle sold or distributed by
21the manufacturer or distributor, a new vehicle or parts or
22accessories to new vehicles as are covered by the franchise, if the
23vehicle, parts, or accessories are publicly advertised as being
24available for delivery or actually being delivered. This subdivision
25is not violated, however, if the failure is caused by acts or causes
26beyond the control of the manufacturer, manufacturer branch,
27distributor, or distributor branch.

28(b) To prevent or require, or attempt to prevent or require, by
29contract or otherwise, a change in the capital structure of a
30dealership or the means by or through which the dealer finances
31the operation of the dealership, if the dealer at all times meets
32reasonable capital standards agreed to by the dealer and the
33manufacturer or distributor, and if a change in capital structure
34does not cause a change in the principal management or have the
35effect of a sale of the franchise without the consent of the
36manufacturer or distributor.

37(c) To prevent or require, or attempt to prevent or require, a
38dealer to change the executive management of a dealership, other
39than the principal dealership operator or operators, if the franchise
P12   1was granted to the dealer in reliance upon the personal
2qualifications of that person.

3(d) (1) Except as provided in subdivision (t), to prevent or
4require, or attempt to prevent or require, by contract or otherwise,
5a dealer, or an officer, partner, or stockholder of a dealership, the
6sale or transfer of a part of the interest of any of them to another
7person. A dealer, officer, partner, or stockholder shall not, however,
8have the right to sell, transfer, or assign the franchise, or a right
9thereunder, without the consent of the manufacturer or distributor
10except that the consent shall not be unreasonably withheld.

11(2) (A) For the transferring franchisee to fail, prior to the sale,
12transfer, or assignment of a franchisee or the sale, assignment, or
13transfer of all, or substantially all, of the assets of the franchised
14business or a controlling interest in the franchised business to
15another person, to notify the manufacturer or distributor of the
16franchisee’s decision to sell, transfer, or assign the franchise. The
17notice shall be in writing and shall include all of the following:

18(i) The proposed transferee’s name and address.

19(ii) A copy of all of the agreements relating to the sale,
20assignment, or transfer of the franchised business or its assets.

21(iii) The proposed transferee’s application for approval to
22become the successor franchisee. The application shall include
23forms and related information generally utilized by the
24manufacturer or distributor in reviewing prospective franchisees,
25if those forms are readily made available to existing franchisees.
26As soon as practicable after receipt of the proposed transferee’s
27application, the manufacturer or distributor shall notify the
28franchisee and the proposed transferee of information needed to
29make the application complete.

30(B) For the manufacturer or distributor, to fail, on or before 60
31days after the receipt of all of the information required pursuant
32to subparagraph (A), or as extended by a written agreement
33between the manufacturer or distributor and the franchisee, to
34notify the franchisee of the approval or the disapproval of the sale,
35transfer, or assignment of the franchise. The notice shall be in
36writing and shall be personally served or sent by certified mail,
37return receipt requested, or by guaranteed overnight delivery
38service that provides verification of delivery and shall be directed
39to the franchisee. A proposed sale, assignment, or transfer shall
40be deemed approved, unless disapproved by the franchisor in the
P13   1manner provided by this subdivision. If the proposed sale,
2assignment, or transfer is disapproved, the franchisor shall include
3in the notice of disapproval a statement setting forth the reasons
4for the disapproval.

5(3) In an action in which the manufacturer’s or distributor’s
6withholding of consent under this subdivision or subdivision (e)
7is an issue, whether the withholding of consent was unreasonable
8is a question of fact requiring consideration of all the existing
9circumstances.

10(e) To prevent, or attempt to prevent, a dealer from receiving
11fair and reasonable compensation for the value of the franchised
12business. There shall not be a transfer or assignment of the dealer’s
13franchise without the consent of the manufacturer or distributor,
14which consent shall not be unreasonably withheld or conditioned
15upon the release, assignment, novation, waiver, estoppel, or
16modification of a claim or defense by the dealer.

17(f) To obtain money, goods, services, or another benefit from
18a person with whom the dealer does business, on account of, or in
19relation to, the transaction between the dealer and that other person,
20other than for compensation for services rendered, unless the
21benefit is promptly accounted for, and transmitted to, the dealer.

22(g) (1) Except as provided in paragraph (3), to obtain from a
23dealer or enforce against a dealer an agreement, provision, release,
24assignment, novation, waiver, or estoppel that does any of the
25following:

26(A) Modifies or disclaims a duty or obligation of a manufacturer,
27manufacturer branch, distributor, distributor branch, or
28representative, or a right or privilege of a dealer, pursuant to
29Chapter 4 (commencing with Section 11700) of Division 5 or
30Chapter 6 (commencing with Section 3000) of Division 2.

31(B) Limits or constrains the right of a dealer to file, pursue, or
32submit evidence in connection with a protest before the board.

33(C) Requires a dealer to terminate a franchise.

34(D) Requires a controversy between a manufacturer,
35manufacturer branch, distributor, distributor branch, or
36representative and a dealer to be referred to a person for a binding
37determination. However, this subparagraph does not prohibit
38arbitration before an independent arbitrator, provided that whenever
39a motor vehicle franchise contract provides for the use of arbitration
40to resolve a controversy arising out of, or relating to, that contract,
P14   1arbitration may be used to settle the controversy only if, after the
2controversy arises, all parties to the controversy consent in writing
3to use arbitration to settle the controversy. For the purpose of this
4subparagraph, the terms “motor vehicle” and “motor vehicle
5franchise contract” shall have the same meaning as defined in
6Section 1226 of Title 15 of the United States Code. If arbitration
7is elected to settle a dispute under a motor vehicle franchise
8contract, the arbitrator shall provide the parties to the arbitration
9with a written explanation of the factual and legal basis for the
10award.

11(2) An agreement, provision, release, assignment, novation,
12waiver, or estoppel prohibited by this subdivision shall be
13unenforceable and void.

14(3) This subdivision does not do any of the following:

15(A) Limit or restrict the terms upon which parties to a protest
16before the board, civil action, or other proceeding can settle or
17resolve, or stipulate to evidentiary or procedural matters during
18the course of, a protest, civil action, or other proceeding.

19(B) Affect the enforceability of any stipulated order or other
20order entered by the board.

21(C) Affect the enforceability of any provision in a contract if
22the provision is not prohibited under this subdivision or any other
23law.

24(D) Affect the enforceability of a provision in any contract
25entered into on or before December 31, 2011.

26(E) Prohibit a dealer from waiving its right to file a protest
27pursuant to Section 3065.1 if the waiver agreement is entered into
28after a franchisor incentive program claim has been disapproved
29by the franchisor and the waiver is voluntarily given as part of an
30agreement to settle that claim.

31(F) Prohibit a voluntary agreement supported by valuable
32consideration, other than granting or renewing a franchise, that
33does both of the following:

34(i) Provides that a dealer establish or maintain exclusive
35facilities, personnel, or display space or provides that a dealer
36make a material alteration, expansion, or addition to a dealership
37facility.

38(ii) Contains no waiver or other provision prohibited by
39subparagraph (A), (B), (C), or (D) of paragraph (1).

P15   1(G) Prohibit an agreement separate from the franchise agreement
2that implements a dealer’s election to terminate the franchise if
3the agreement is conditioned only on a specified time for
4termination or payment of consideration to the dealer.

5(H) (i) Prohibit a voluntary waiver agreement, supported by
6valuable consideration, other than the consideration of renewing
7a franchise, to waive the right of a dealer to file a protest under
8Section 3062 for the proposed establishment or relocation of a
9specific proposed dealership, if the waiver agreement provides all
10of the following:

11(I) The approximate address at which the proposed dealership
12will be located.

13(II) The planning potential used to establish the proposed
14dealership’s facility, personnel, and capital requirements.

15(III) An approximation of projected vehicle and parts sales, and
16number of vehicles to be serviced at the proposed dealership.

17(IV) Whether the franchisor or affiliate will hold an ownership
18interest in the proposed dealership or real property of the proposed
19dealership, and the approximate percentage of any franchisor or
20affiliate ownership interest in the proposed dealership.

21(V) The line-makes to be operated at the proposed dealership.

22(VI) If known at the time the waiver agreement is executed, the
23identity of the dealer who will operate the proposed dealership.

24(VII) The date the waiver agreement is to expire, which may
25not be more than 30 months after the date of execution of the
26waiver agreement.

27(ii) Notwithstanding the provisions of a waiver agreement
28entered into pursuant to the provisions of this subparagraph, a
29dealer may file a protest under Section 3062 if any of the
30information provided pursuant to clause (i) has become materially
31inaccurate since the waiver agreement was executed. Any
32determination of the enforceability of a waiver agreement shall be
33determined by the board and the franchisor shall have the burden
34 of proof.

35(h) To increase prices of motor vehicles that the dealer had
36ordered for private retail consumers prior to the dealer’s receipt
37of the written official price increase notification. A sales contract
38signed by a private retail consumer is evidence of the order. In the
39event of manufacturer price reductions, the amount of the reduction
40received by a dealer shall be passed on to the private retail
P16   1consumer by the dealer if the retail price was negotiated on the
2basis of the previous higher price to the dealer. Price reductions
3apply to all vehicles in the dealer’s inventory that were subject to
4the price reduction. Price differences applicable to new model or
5series motor vehicles at the time of the introduction of new models
6or series shall not be considered a price increase or price decrease.
7This subdivision does not apply to price changes caused by either
8of the following:

9(1) The addition to a motor vehicle of required or optional
10equipment pursuant to state or federal law.

11(2) Revaluation of the United States dollar in the case of a
12foreign-make vehicle.

13(i) To fail to pay to a dealer, within a reasonable time following
14receipt of a valid claim by a dealer thereof, a payment agreed to
15be made by the manufacturer or distributor to the dealer by reason
16of the fact that a new vehicle of a prior year model is in the dealer’s
17inventory at the time of introduction of new model vehicles.

18(j) To deny the widow, widower, or heirs designated by a
19deceased owner of a dealership the opportunity to participate in
20the ownership of the dealership or successor dealership under a
21valid franchise for a reasonable time after the death of the owner.

22(k) To offer refunds or other types of inducements to a person
23for the purchase of new motor vehicles of a certain line-make to
24be sold to the state or a political subdivision of the state without
25making the same offer to all other dealers in the same line-make
26within the relevant market area.

27(l) To modify, replace, enter into, relocate, terminate, or refuse
28to renew a franchise in violation of Article 4 (commencing with
29Section 3060) of Chapter 6 of Division 2.

30(m) To employ a person as a representative who has not been
31licensed pursuant to Article 3 (commencing with Section 11900)
32of Chapter 4 of Division 5.

33(n) To deny a dealer the right of free association with another
34dealer for a lawful purpose.

35(o) (1) To compete with a dealer in the same line-make
36operating under an agreement or franchise from a manufacturer
37or distributor in the relevant market area.

38(2) A manufacturer, branch, or distributor or an entity that
39controls or is controlled by, a manufacturer, branch, or distributor,
P17   1shall not, however, be deemed to be competing in the following
2limited circumstances:

3(A) Owning or operating a dealership for a temporary period,
4not to exceed one year at the location of a former dealership of the
5same line-make that has been out of operation for less than six
6months. However, after a showing of good cause by a
7manufacturer, branch, or distributor that it needs additional time
8to operate a dealership in preparation for sale to a successor
9independent franchisee, the board may extend the time period.

10(B) Owning an interest in a dealer as part of a bona fide dealer
11development program that satisfies all of the following
12requirements:

13(i) The sole purpose of the program is to make franchises
14available to persons lacking capital, training, business experience,
15or other qualities ordinarily required of prospective franchisees
16and the dealer development candidate is an individual who is
17unable to acquire the franchise without assistance of the program.

18(ii) The dealer development candidate has made a significant
19investment subject to loss in the franchised business of the dealer.

20(iii) The program requires the dealer development candidate to
21manage the day-to-day operations and business affairs of the dealer
22and to acquire, within a reasonable time and on reasonable terms
23and conditions, beneficial ownership and control of a majority
24interest in the dealer and disassociation of any direct or indirect
25ownership or control by the manufacturer, branch, or distributor.

26(C) Owning a wholly owned subsidiary corporation of a
27distributor that sells motor vehicles at retail, if, for at least three
28years prior to January 1, 1973, the subsidiary corporation has been
29a wholly owned subsidiary of the distributor and engaged in the
30sale of vehicles at retail.

31(3) (A) A manufacturer, branch, and distributor that owns or
32operates a dealership in the manner described in subparagraph (A)
33of paragraph (2) shall give written notice to the board, within 10
34days, each time it commences or terminates operation of a
35dealership and each time it acquires, changes, or divests itself of
36an ownership interest.

37(B) A manufacturer, branch, and distributor that owns an interest
38in a dealer in the manner described in subparagraph (B) of
39paragraph (2) shall give written notice to the board, annually, of
40the name and location of each dealer in which it has an ownership
P18   1interest, the name of the bona fide dealer development owner or
2owners, and the ownership interests of each owner expressed as a
3percentage.

4(p) To unfairly discriminate among its franchisees with respect
5to warranty reimbursement or authority granted to its franchisees
6to make warranty adjustments with retail customers.

7(q) To sell vehicles to a person not licensed pursuant to this
8chapter for resale.

9(r) To fail to affix an identification number to a park trailer, as
10described in Section 18009.3 of the Health and Safety Code, that
11is manufactured on or after January 1, 1987, and that does not
12clearly identify the unit as a park trailer to the department. The
13configuration of the identification number shall be approved by
14the department.

15(s) To dishonor a warranty, rebate, or other incentive offered
16to the public or a dealer in connection with the retail sale of a new
17motor vehicle, based solely upon the fact that an autobroker
18arranged or negotiated the sale. This subdivision shall not prohibit
19the disallowance of that rebate or incentive if the purchaser or
20dealer is ineligible to receive the rebate or incentive pursuant to
21any other term or condition of a rebate or incentive program.

22(t) To exercise a right of first refusal or other right requiring a
23franchisee or an owner of the franchise to sell, transfer, or assign
24to the franchisor, or to a nominee of the franchisor, all or a material
25part of the franchised business or of the assets of the franchised
26business unless all of the following requirements are met:

27(1) The franchise authorizes the franchisor to exercise a right
28of first refusal to acquire the franchised business or assets of the
29franchised business in the event of a proposed sale, transfer, or
30assignment.

31(2) The franchisor gives written notice of its exercise of the
32right of first refusal no later than 45 days after the franchisor
33receives all of the information required pursuant to subparagraph
34(A) of paragraph (2) of subdivision (d).

35(3) The sale, transfer, or assignment being proposed relates to
36not less than all or substantially all of the assets of the franchised
37business or to a controlling interest in the franchised business.

38(4) The proposed transferee is neither a family member of an
39owner of the franchised business, nor a managerial employee of
40the franchisee owning 15 percent or more of the franchised
P19   1business, nor a corporation, partnership, or other legal entity owned
2by the existing owners of the franchised business. For purposes of
3this paragraph, a “family member” means the spouse of an owner
4of the franchised business, the child, grandchild, brother, sister,
5or parent of an owner, or a spouse of one of those family members.
6This paragraph does not limit the rights of the franchisor to
7disapprove a proposed transferee as provided in subdivision (d).

8(5) Upon the franchisor’s exercise of the right of first refusal,
9the consideration paid by the franchisor to the franchisee and
10owners of the franchised business shall equal or exceed all
11consideration that each of them were to have received under the
12terms of, or in connection with, the proposed sale, assignment, or
13transfer, and the franchisor shall comply with all the terms and
14conditions of the agreement or agreements to sell, transfer, or
15assign the franchised business.

16(6) The franchisor shall reimburse the proposed transferee for
17expenses paid or incurred by the proposed transferee in evaluating,
18investigating, and negotiating the proposed transfer to the extent
19those expenses do not exceed the usual, customary, and reasonable
20fees charged for similar work done in the area in which the
21franchised business is located. These expenses include, but are not
22limited to, legal and accounting expenses, and expenses incurred
23for title reports and environmental or other investigations of real
24property on which the franchisee’s operations are conducted. The
25proposed transferee shall provide the franchisor a written
26itemization of those expenses, and a copy of all nonprivileged
27reports and studies for which expenses were incurred, if any, within
2830 days of the proposed transferee’s receipt of a written request
29from the franchisor for that accounting. The franchisor shall make
30payment within 30 days of exercising the right of first refusal.

31(u) (1) To unfairly discriminate in favor of a dealership owned
32or controlled, in whole or in part, by a manufacturer or distributor
33or an entity that controls or is controlled by the manufacturer or
34distributor. Unfair discrimination includes, but is not limited to,
35the following:

36(A) The furnishing to a franchisee or dealer that is owned or
37controlled, in whole or in part, by a manufacturer, branch, or
38distributor of any of the following:

39(i) A vehicle that is not made available to each franchisee
40pursuant to a reasonable allocation formula that is applied
P20   1uniformly, and a part or accessory that is not made available to all
2franchisees on an equal basis when there is no reasonable allocation
3formula that is applied uniformly.

4(ii) A vehicle, part, or accessory that is not made available to
5each franchisee on comparable delivery terms, including the time
6of delivery after the placement of an order. Differences in delivery
7terms due to geographic distances or other factors beyond the
8control of the manufacturer, branch, or distributor shall not
9constitute unfair competition.

10(iii) Information obtained from a franchisee by the manufacturer,
11branch, or distributor concerning the business affairs or operations
12of a franchisee in which the manufacturer, branch, or distributor
13does not have an ownership interest. The information includes,
14but is not limited to, information contained in financial statements
15and operating reports, the name, address, or other personal
16information or buying, leasing, or service behavior of a dealer
17customer, and other information that, if provided to a franchisee
18or dealer owned or controlled by a manufacturer or distributor,
19would give that franchisee or dealer a competitive advantage. This
20clause does not apply if the information is provided pursuant to a
21subpoena or court order, or to aggregated information made
22available to all franchisees.

23(iv) Sales or service incentives, discounts, or promotional
24programs that are not made available to all California franchises
25of the same line-make on an equal basis.

26(B) Referring a prospective purchaser or lessee to a dealer in
27which a manufacturer, branch, or distributor has an ownership
28interest, unless the prospective purchaser or lessee resides in the
29area of responsibility assigned to that dealer or the prospective
30 purchaser or lessee requests to be referred to that dealer. For
31purposes of this subparagraph, the term “area of responsibility”
32means a geographic area specified in a franchise that is used by
33the franchisor for the purpose of evaluating the franchisee’s
34performance of its sales and service obligations.

35(2) This subdivision does not prohibit a franchisor from granting
36a franchise to prospective franchisees or assisting those franchisees
37during the course of the franchise relationship as part of a program
38or programs to make franchises available to persons lacking capital,
39training, business experience, or other qualifications ordinarily
40required of prospective franchisees.

P21   1(v) (1) To access, modify, or extract information from a
2confidential dealer computer record, as defined in Section
311713.25, without obtaining the prior written consent of the dealer
4and without maintaining administrative, technical, and physical
5safeguards to protect the security, confidentiality, and integrity of
6the information.

7(2) Paragraph (1) does not limit a duty that a dealer may have
8to safeguard the security and privacy of records maintained by the
9dealer.

10(w) (1) To use electronic, contractual, or other means to prevent
11or interfere with any of the following:

12(A) The lawful efforts of a dealer to comply with federal and
13state data security and privacy laws.

14(B) The ability of a dealer to do either of the following:

15(i) Ensure that specific data accessed from the dealer’s computer
16system is within the scope of consent specified in subdivision (v).

17(ii) Monitor specific data accessed from or written to the dealer’s
18computer system.

19(2) Paragraph (1) does not limit a duty that a dealer may have
20to safeguard the security and privacy of records maintained by the
21dealer.

22(x) (1) To unfairly discriminate against a franchisee selling a
23service contract, debt cancellation agreement, maintenance
24agreement, or similar product not approved, endorsed, sponsored,
25or offered by the manufacturer, manufacturer branch, distributor,
26or distributor branch or affiliate. For purposes of this subdivision,
27unfair discrimination includes, but is not limited to, any of the
28following:

29(A) Express or implied statements that the dealer is under an
30obligation to exclusively sell or offer to sell service contracts, debt
31cancellation agreements, or similar products approved, endorsed,
32sponsored, or offered by the manufacturer, manufacturer branch,
33distributor, or distributor branch or affiliate.

34(B) Express or implied statements that selling or offering to sell
35service contracts, debt cancellation agreements, maintenance
36agreements, or similar products not approved, endorsed, sponsored,
37or offered by the manufacturer, manufacturer branch, distributor,
38or distributor branch or affiliate, or the failure to sell or offer to
39sell service contracts, debt cancellation agreements, maintenance
40agreements, or similar products approved, endorsed, sponsored,
P22   1or offered by the manufacturer, manufacturer branch, distributor,
2or distributor branch or affiliate will have any negative
3consequences for the dealer.

4(C) Measuring a dealer’s performance under a franchise
5 agreement based upon the sale of service contracts, debt
6cancellation agreements, or similar products approved, endorsed,
7sponsored, or offered by the manufacturer, manufacturer branch,
8distributor, or distributor branch or affiliate.

9(D) Requiring a dealer to actively promote the sale of service
10contracts, debt cancellation agreements, or similar products
11approved, endorsed, sponsored, or offered by the manufacturer,
12manufacturer branch, distributor, or distributor branch or affiliate.

13(E) Conditioning access to vehicles or parts, or vehicle sales or
14service incentives upon the sale of service contracts, debt
15cancellation agreements, or similar products approved, endorsed,
16sponsored, or offered by the manufacturer, manufacturer branch,
17distributor, or distributor branch or affiliate.

18(2) Unfair discrimination does not include, and nothing shall
19prohibit a manufacturer from, offering an incentive program to
20vehicle dealers who voluntarily sell or offer to sell service
21contracts, debt cancellation agreements, or similar products
22approved, endorsed, sponsored, or offered by the manufacturer,
23manufacturer branch, distributor, or distributor branch or affiliate,
24if the program does not provide vehicle sales or service incentives.

25(3) This subdivision does not prohibit a manufacturer,
26manufacturer branch, distributor, or distributor branch from
27requiring a franchisee that sells a used vehicle as “certified” under
28a certified used vehicle program established by the manufacturer,
29manufacturer branch, distributor, or distributor branch to provide
30a service contract approved, endorsed, sponsored, or offered by
31the manufacturer, manufacturer branch, distributor, or distributor
32branch.

33(4) Unfair discrimination does not include, and nothing shall
34prohibit a franchisor from requiring a franchisee to provide, the
35following notice prior to the sale of the service contract if the
36service contract is not provided or backed by the franchisor and
37the vehicle is of the franchised line-make:
38
39“Service Contract Disclosure

P23   1The service contract you are purchasing is not provided or backed
2by the manufacturer of the vehicle you are purchasing. The
3manufacturer of the vehicle is not responsible for claims or repairs
4under this service contract.
5_____________________
6Signature of Purchaser”


8(y) To take or threaten to take any adverse action against a dealer
9pursuant to an export or sale-for-resale prohibition because the
10dealer sold or leased a vehicle to a customer who either exported
11the vehicle to a foreign country or resold the vehicle in violation
12of the prohibition, unless the export or sale-for-resale prohibition
13policy was provided to the dealer in writing prior to the sale or
14lease, and the dealer knew or reasonably should have known of
15the customer’s intent to export or resell the vehicle in violation of
16the prohibition at the time of sale or lease. If the dealer causes the
17vehicle to be registered in this or any other state, and collects or
18causes to be collected any applicable sales or use tax due to this
19state, a rebuttable presumption is established that the dealer did
20not have reason to know of the customer’s intent to export or resell
21the vehicle.

22(z) Commencing July 1, 2016, to unfairly discriminate among
23its franchisees with respect to reimbursement or authority granted
24to its franchisees pursuant to subdivision (c) or (d) of Section
2511760.

26

SEC. 7.  

Article 1.1 (commencing with Section 11750) is added
27to Chapter 4 of Division 5 of the Vehicle Code, to read:

28 

29Article 1.1.  Consumer Automotive Recall Safety Act
30

 

31

11750.  

Thisbegin delete chapterend deletebegin insert articleend insert shall be known, and may be cited,
32as the Consumer Automotive Recall Safety Act (CARS Act).

33

11752.  

As used in thisbegin delete chapter,end deletebegin insert article,end insert the following definitions
34apply:

35(a) The term “dealer” has the same meaning as in Section 285.

36(b) (1) A “manufacturer’s recall” is a recall conducted pursuant
37to Sections 30118 to 30120, inclusive, of Title 49 of the United
38States Code, the National Highway Traffic and Motor Vehicle
39 Safety Act (49 U.S.C. Sec. 30101, et seq.).

P24   1(2) A manufacturer’s recall does not include a service campaign
2or emission recall when the vehicle manufacturer or the National
3Highway Traffic Safety Administration has not issued a recall
4notice to owners of affected vehicles, pursuant to Section 30118
5of Title 49 of the United States Code, the National Highway Traffic
6and Motor Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.). A
7manufacturer’s recall does not include a Stop Sale - Stop Drive
8recall.

9(c) The term “new motor vehicle dealer” has the same meaning
10as in Section 426.

11(d) A “recall database” is a database from which an individual
12may obtain vehicle identification number (VIN) specific Stop Sale
13- Stop Drive recall and manufacturer’s recall information relevant
14to a specific vehicle.

15(1) For a vehicle manufacturer that is not subject to the
16regulations adopted pursuant to Section 31301 of the federal
17Moving Ahead for Progress in the 21st Century Act (Public Law
18112-141), a recall database is one of the following:

19(A) The recall data on a vehicle manufacturer’s Internet Web
20site for a specific vehicle’sbegin delete line make.end deletebegin insert line-make.end insert

21(B) The recall data in a vehicle manufacturer’s internal system
22that provides information to its franchisees on vehicles subject to
23recall.

24(C) The recall data in subparagraph (A) or (B) that is contained
25in a commercially available vehicle history system.

26(2) For a vehicle manufacturer that is subject to the regulations
27adopted pursuant to Section 31301 of the federal Moving Ahead
28for Progress in the 21st Century Act (Public Law 112-141), a recall
29 database shall include, at a minimum, the recall information
30required pursuant to Section 573.15 of Title 49 of the Code of
31Federal Regulations.

32(e) A “recall database report” is a report, specific to a vehicle
33that is identified by its VIN, containing information obtained from
34a recall database.

35(f) A “rental car company” is a person or entity in the business
36of renting passenger vehicles to the public in California.

37(g) A “Stop Sale - Stop Drive recall” is a recall notice provided
38to owners of affected vehicles, pursuant to Sections 30118 to
3930120, inclusive, of Title 49 of the United States Code, the National
40Highway Traffic and Motor Vehicle Safety Act (49 U.S.C. Sec.
P25   130101, et seq.), when the vehicle manufacturer or the National
2Highway Traffic Safety Administration informs the dealer to stop
3the sale of the vehicle or contains preremedy precaution advice to
4the owner to stop operating the vehicle.

5(h) A “vehicle manufacturer” is a person who manufactures,
6assembles, or distributes new motor vehicles, sold or leased, that
7are subject to registration under this code.

8

11754.  

(a) A dealer shall not display or offer for sale at retail
9a used vehicle, as defined in Sectionbegin delete 665 andend deletebegin insert 665, that isend insert subject
10to registration under this code, unless the dealer has obtained a
11recall database report within 30 days of the display or offer.

12(b) If a recall database report obtained by a dealer indicates that
13a used vehicle is subject to a Stop Sale - Stop Drive recall, the
14dealerbegin delete is prohibited from selling or leasingend deletebegin insert shall not sell or leaseend insert
15 that vehicle at retail until the recall repair has been made.

16(c) If a recall database report obtained by a dealer indicates that
17a used vehicle is subject to a manufacturer’s recall and the used
18vehicle is of the samebegin delete line makeend deletebegin insert line-makeend insert as the franchise of the
19new motor vehicle dealer, the dealerbegin delete is prohibited from selling or
20leasingend delete
begin insert shall not sell or leaseend insert that vehicle at retail until the recall
21repair has been made.

22(d) If a recall database report obtained by a dealer indicates that
23a used vehicle is subject to a manufacturer’s recall and the used
24vehicle is not of the samebegin delete line makeend deletebegin insert line-makeend insert as the franchise of
25the new motor vehicle dealer or the dealer does not have a
26franchise, the dealer may sell or lease the vehicle at retail if all of
27the following are satisfied:

28(1) The dealer discloses the manufacturer’s recall by providing
29a copy of the recall database report to the consumer prior to sale
30or lease.

31(2) The consumer signs the disclosure acknowledging that the
32vehicle has a manufacturer’s recall and that the consumer can get
33the recall repaired at no cost to the consumer at a new motor vehicle
34dealer of the vehicle’sbegin delete line make.end deletebegin insert line-make.end insert

35(e) To comply with subdivision (d), and notwithstanding Section
362981.9 of the Civil Code, a recall database report, that indicates
37the vehicle is subject to a manufacturer’s recall and the recall repair
38has not been made, shall be disclosed and the disclosure signed
39by the consumer in a document separate from the conditional sales
40contract or other vehicle purchase agreement.

begin insert

P26   1(f) The disclosure by a dealer, and receipt and acknowledgment
2by the consumer, of the information specified in subdivisions (d)
3and (e) has no legal effect other than to demonstrate compliance
4by the dealer with the requirements prescribed in those
5subdivisions. Nothing in this article shall be interpreted to place
6consumers in a less advantageous legal position for having
7received or signed the disclosures provided pursuant to this article
8than if no disclosure had been made.

end insert
begin delete
9

11756.  

(a) A rental car company shall not offer a vehicle for
10rent unless the rental car company has obtained a recall database
11report within 30 days of the offer.

12(b) If a recall database report obtained by a rental car company
13indicates that a vehicle is subject to a Stop Sale - Stop Drive recall,
14the rental car company is prohibited from renting that vehicle until
15the recall repair has been made.

16(c) If a recall database report obtained by a rental car company
17that a vehicle is subject to a manufacturer’s recall, the rental car
18company may rent the vehicle if all of the following are satisfied:

19(1) The rental car company discloses the manufacturer’s recall
20by providing a copy of the recall database report to the consumer
21prior to rental.

22(2) The consumer signs the disclosure acknowledging that the
23vehicle is subject to a manufacturer’s recall.

end delete
begin insert
24

begin insert11756.end insert  

(a) No later than 48 hours after receiving a notice of
25a recall conducted pursuant to Sections 30118 to 30120, inclusive,
26of Title 49 of the United States Code, the National Highway Traffic
27and Motor Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.), or
28sooner if practicable, a rental car company is prohibited from
29renting or offering for rent any vehicle subject to that recall.

30(b) If a recall notification indicates that the remedy for the recall
31is not immediately available and specifies actions to temporarily
32repair the vehicle in a manner to eliminate the safety risk that
33prompted the recall, the rental car company, after having the
34repairs completed, may rent the vehicle. Once the remedy for the
35rental vehicle becomes available to the rental car company, the
36rental car company may not rent the vehicle until the vehicle has
37been repaired.

end insert
38

11758.  

(a) The department may refuse transfer of registration
39of a motor vehicle under this code unless the transferee, in
40submitting an application to the department for title, includes with
P27   1the application a statement signed and dated by the transferor
2acknowledging that all Stop Sale - Stop Drive recalls and
3manufacturer’s recalls were disclosed to the transferee as provided
4in subdivision (c).

5(b) If the title to a motor vehicle issued to a transferor is in the
6possession of a lienholder when the transferor transfers ownership
7of the vehicle, the transferor may use a written power of attorney
8in making the recall disclosure required under subdivision (c).

9(c) A transferor transferring registration of a motor vehicle shall
10disclose, in writing, to the transferee all Stop Sale - Stop Drive
11recalls and manufacturer’s recalls. A person acquiring the vehicle
12shall not accept a vehicle transfer and reassignment document
13unless it is complete.

14(d) Subdivisions (a), (b), and (c) do not apply to the transfer of
15a motor vehicle to a dealer or wholesaler.

16

11760.  

(a) A vehicle manufacturer shall clearly and
17conspicuously display on its Internet Web site and in all recall
18notifications pursuant to Section 30118 of Title 49 of the United
19States Code, the National Highway Traffic and Motor Vehicle
20Safety Act (49 U.S.C. Sec. 30101, et seq.), whether a vehicle is
21subject to a Stop Sale - Stop Drive recall.

22(b) When a consumer seeks to repair a vehicle subject to a Stop
23Sale - Stop Drive recall or manufacturer’s recall as identified in
24a recall database report and the parts or procedures for the repair
25are not yet available, the vehicle manufacturer shall, upon request
26by the consumer, provide a rental or loaner vehicle to the consumer
27at no cost to the consumer until the recall repair has been made.
28begin insert The consumer shall not be provided with a rental or loaner vehicle
29that is subject to a Stop Sale - Stop Drive recall or a
30manufacturer’s recall.end insert

31(c) If a vehicle manufacturer requires a franchisee to provide a
32rental or loaner vehicle to a consumer under subdivision (b), the
33vehicle manufacturer shall adequately and fairly compensate the
34franchisee for all costs incurred in providing a loaner or rental
35vehicle to a consumer. For purposes of this paragraph, adequate
36and fair compensation shall be the average daily rental amount
37of____ dollars ($____) for each day a consumer uses a loaner or
38rental vehicle.

39(d) A vehicle manufacturer shall adequately and fairly
40compensate each of its franchisees for all costs incurred in storing
P28   1vehicles with a Stop Sale - Stop Drive recall or manufacturer’s
2recall in the franchisee’s possession if the parts or procedures are
3not yet available to repair the recall of the vehicle. For purposes
4of this paragraph, adequate and fair compensation shall be the
5average daily amount of ____ dollars ($_____) for each day a
6vehicle subject to a Stop Sale - Stop Drive recall or manufacturer’s
7recall is in the franchisee’s possession, the parts or procedures are
8not yet available to repair the recall of the vehicle, and the recall
9repair has not been made.

10

11762.  

(a) Thisbegin delete chapterend deletebegin insert articleend insert shall not create any legal duty
11upon the dealer, franchisee, rental car company, or private seller
12related to the accuracy, errors, or omissions contained in a recall
13database report or any legal duty to provide information added to
14a recall database after the dealer, franchisee, rental car company,
15or private seller obtained the recall database report pursuant to
16Sections 11754, 11756, and 11758.begin insert Nothing in this article shall
17affect any legal rights, claims, or remedies otherwise available
18under law.end insert

19(b) The provisions of this article are severable. If any provision
20of this article or its application is held invalid, that invalidity shall
21not affect other provisions or applications that can be given effect
22without the invalid provision or application.

23(c) Thisbegin delete chapterend deletebegin insert articleend insert does not apply to the sale of a
24recreational vehicle, a motorcycle, an off-highway motor vehicle
25subject to identification under Section 38010, a vehicle sold by a
26dismantler after being reported for dismantling pursuant to Section
2711520, or a vehicle sold by a salvage pool after obtaining a salvage
28pool certificate pursuant to Section 11515 or a nonrepairable
29vehicle certificate issued pursuant to Section 11515.2.

30(d) Thisbegin delete chapterend deletebegin insert articleend insert shall become operative on July 1, 2016.

31

SEC. 8.  

No reimbursement is required by this act pursuant to
32Section 6 of Article XIII B of the California Constitution because
33the only costs that may be incurred by a local agency or school
34district will be incurred because this act creates a new crime or
35infraction, eliminates a crime or infraction, or changes the penalty
36for a crime or infraction, within the meaning of Section 17556 of
37the Government Code, or changes the definition of a crime within
P29   1the meaning of Section 6 of Article XIII B of the California
2Constitution.



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