Amended in Assembly May 28, 2015

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)

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

February 11, 2015


An act to amend Sections 3050, 3066,begin delete 4751,end deletebegin insert 4451,end insert 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 a recall but 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 vehicle is subject to a Stop Sale - Stop Drive recall, until the recalled vehicle has been repaired, subject to exception. The act would prohibit a rental car company from renting a vehicle that is subject to a recall, until the recalled vehicle has been repaired, as specified. 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.

begin delete

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.

end delete
begin delete

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.

end delete
begin insert

Existing law requires the Department of Motor Vehicles to issue a certificate of ownership to the legal owner of a vehicle upon registering a vehicle, and requires the certificate of ownership to contain specified information, including the information required upon the face of the registration card.

end insert
begin insert

This bill would additionally require the certificate of ownership to contain a provision for a recall disclosure statement, as specified.

end insert

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
P4    122 million recalls were issued in 2013 and 16.2 million were issued
2in 2012. The increase of recalls in 2014 is a 190 percent increase
3from 2013 and a 293.8 percent increase from 2012.

4(2) While federal motor vehicle safety standards are more
5demanding now than at any other point in time and new vehicles
6sold today are the safest in history, the exponential growth of
7recalls issued on motor vehicles has caused confusion and apathy
8for far too many Californians. According to the National Highway
9Traffic Safety Administration and others, about one-third of all
10recalled vehicles are never repaired by the vehicle’s owner.

11(3) Federal regulations now require most vehicle manufacturers
12to provide motor vehicle safety recall information applicable to
13the vehicles they manufacture on the Internet and to the public.
14Dealers, rental car companies, and private parties offering vehicles
15for sale or rent now have greater access to recall information than
16ever before.

17(4) Federal law imposes a requirement not to sell a new vehicle
18subject to a recall, but neither federal nor California law addresses
19used vehicles subject to a recall. It is the intent of this act to address
20used vehicles subject to a recall that are not yet repaired.

21(b) Accordingly, it is the intent of the Legislature in enacting
22this act to increase consumer awareness of recalls in the car
23purchasing and rental process, to ensure that consumers have access
24to loaner and rental vehicles while their recalled vehicles are being
25repaired at a new motor vehicle dealer, and to ensure that a recalled
26vehicle that poses a risk of imminent harm is not sold or rented to
27Californians until the risk is removed and the vehicle is repaired.

28(c) The Legislature further finds and declares all of the
29following:

30(1) The distribution, sale, and service of new motor vehicles in
31the State of California vitally affects the general economy of this
32state and the public welfare.

33(2) The new motor vehicle franchise system, which operates
34within a strictly defined and highly regulated statutory scheme,
35assures the consuming public of a well-organized distribution
36system for the availability and sale of new motor vehicles
37throughout the state, provides a network of quality warranty, recall,
38and repair facilities to maintain those vehicles, and creates a
39cost-effective method for the state to police those systems through
P5    1the licensing and regulation of private sector franchisors and
2franchisees.

3(3) Franchisors sometimes establish programs to reimburse
4 franchisees for loaner or rental cars given to consumers whose
5vehicles have been recalled, but California franchise laws fail to
6establish guidelines for rental or loaner vehicle reimbursement.

7(4) California franchise laws require manufacturers to provide
8reasonable reimbursement to dealers for warranty and recall work,
9but fails to establish guidelines for compensating franchisee costs
10associated with recalled vehicles that cannot be repaired and remain
11in the franchisee’s possession.

12(d) Accordingly, it is the intent of the Legislature in enacting
13this act to ensure that new motor vehicle dealer franchisees are
14treated fairly by their franchisors, that new motor vehicle dealer
15franchisees are reasonably reimbursed for providing loaner or
16rental vehicles to consumers who have recalled vehicles when the
17parts or procedures to make the recall repair are not available, and
18that new motor vehicle dealer franchisees are reasonably
19compensated for recalled vehicles at their dealerships that cannot
20immediately be repaired and must be stored by the franchisee at
21the dealership.

22

SEC. 2.  

Section 3050 of the Vehicle Code is amended to read:

23

3050.  

The board shall do all of the following:

24(a) Adopt rules and regulations in accordance with Chapter 3.5
25(commencing with Section 11340) of Part 1 of Division 3 of Title
262 of the Government Code governing those matters that are
27specifically committed to its jurisdiction.

28(b) Hear and determine, within the limitations and in accordance
29with the procedure provided, an appeal presented by an applicant
30for, or holder of, a license as a new motor vehicle dealer,
31manufacturer, manufacturer branch, distributor, distributor branch,
32or representative when the applicant or licensee submits an appeal
33provided for in this chapter from a decision arising out of the
34department.

35(c) Consider any matter concerning the activities or practices
36of any person applying for or holding a license as a new motor
37vehicle dealer, manufacturer, manufacturer branch, distributor,
38distributor branch, or representative pursuant to Chapter 4
39(commencing with Section 11700) of Division 5 submitted by any
40person. A member of the board who is a new motor vehicle dealer
P6    1may not participate in, hear, comment, advise other members upon,
2or decide any matter considered by the board pursuant to this
3subdivision that involves a dispute between a franchisee and
4franchisor. After that consideration, the board may do any one or
5any combination of the following:

6(1) Direct the department to conduct investigation of matters
7that the board deems reasonable, and make a written report on the
8results of the investigation to the board within the time specified
9by the board.

10(2) Undertake to mediate, arbitrate, or otherwise resolve any
11honest difference of opinion or viewpoint existing between any
12member of the public and any new motor vehicle dealer,
13manufacturer, manufacturer branch, distributor, distributor branch,
14or representative.

15(3) Order the department to exercise any and all authority or
16power that the department may have with respect to the issuance,
17renewal, refusal to renew, suspension, or revocation of the license
18of any new motor vehicle dealer, manufacturer, manufacturer
19branch, distributor, distributor branch, or representative as that
20license is required under Chapter 4 (commencing with Section
2111700) of Division 5.

22(d) Hear and decide, within the limitations and in accordance
23with the procedure provided, a protest presented by a franchisee
24pursuant to Section 3060, 3062, 3064, 3065, 3065.1, 3065.2, 3070,
253072, 3074, 3075, or 3076. A member of the board who is a new
26motor vehicle dealer may not participate in, hear, comment, advise
27other members upon, or decide, any matter involving a protest
28filed pursuant to Article 4 (commencing with Section 3060), unless
29all parties to the protest stipulate otherwise.

30(e) Notwithstanding subdivisions (c) and (d), the courts have
31jurisdiction over all common law and statutory claims originally
32cognizable in the courts. For those claims, a party may initiate an
33action directly in any court of competent jurisdiction.

34

SEC. 3.  

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

35

3065.2.  

(a) A claim made by a franchisee for payment under
36Section 11760 shall be either approved or disapproved within 30
37days after receipt by the franchisor. When a claim is disapproved,
38the franchisee who submits it shall be notified in writing of its
39disapproval within the required period, and each notice shall state
40the specific grounds upon which the disapproval is based. Any
P7    1claim not specifically disapproved in writing within 30 days from
2receipt shall be deemed approved on the 30th day.

3(b) Franchisee claims for compensation under Section 11760
4shall not be disapproved unless the claim is false or fraudulent,
5the claim is ineligible under the statute, or for material
6 noncompliance with reasonable and nondiscriminatory
7requirements of the franchisor, including documentation and
8administrative claims submission requirements.

9(c) The franchisor shall provide a reasonable appeal process
10allowing the franchisee at least 30 days after receipt of the written
11disapproval notice to respond to any disapproval with additional
12supporting documentation or information rebutting the disapproval.
13If disapproval is based upon noncompliance with documentation
14or administrative claims submission requirements, the franchisor
15shall allow the franchisee at least 30 days from the date of receipt
16of the written disapproval notice to cure any material
17noncompliance. If the disapproval is rebutted, and material
18noncompliance is cured before the applicable deadline, the
19franchisor shall approve the claim.

20(d) If the franchisee provides additional supporting
21documentation or information purporting to rebut the disapproval,
22attempts to cure noncompliance relating to the claim, or otherwise
23appeals denial of the claim, and the franchisor continues to deny
24the claim, the franchisor shall provide the franchisee with a written
25notification of the final denial within 30 days of completion of the
26appeal process, which shall conspicuously state “Final Denial” on
27the first page.

28(e) Following the disapproval of a claim, a franchisee shall have
29six months from receipt of the written notice described in either
30subdivision (a) or (d), whichever is later, to file a protest with the
31board for determination of whether the franchisor complied with
32subdivisions (a), (b), (c), and (d). In any hearing pursuant to this
33subdivision or subdivision (a), (b), (c), or (d), the franchisor shall
34have the burden of proof.

35(f) A claim made by franchisees under this section shall be paid
36within 30 days following approval. Failure to approve or pay within
37the time limits specified in this section, in individual instances for
38reasons beyond the reasonable control of the franchisor, is not a
39violation of this section.

P8    1(g) (1) Audits of franchisee records for payment under Section
211760 may be conducted by the franchisor on a reasonable basis,
3and for a period of nine months after a claim is paid or credit
4issued. A franchisor shall not select a franchisee for an audit, or
5perform an audit, in a punitive, retaliatory, or unfairly
6discriminatory manner. A franchisor may conduct no more than
7one random audit of a franchisee in a nine-month period. The
8franchisor’s notification to the franchisee of any additional audit
9within a nine-month period shall be accompanied by written
10disclosure of the basis for that additional audit.

11(2) Previously approved claims shall not be disapproved and
12charged back unless the claim is false or fraudulent, the claim is
13ineligible under the statute, or for material noncompliance with
14reasonable and nondiscriminatory requirements of the franchisor,
15including documentation and administrative claims submission
16requirements. A franchisor shall not disapprove a claim orbegin delete charge
17backend delete
begin insert chargebackend insert a claim based upon an extrapolation from a
18sample of claims, unless the sample of claims is selected randomly
19and the extrapolation is performed in a reasonable and statistically
20valid manner.

21(3) If the franchisor disapproves of a previously approved claim
22following an audit, the franchisor shall provide to the franchisee,
23within 30 days after the audit, a written disapproval notice stating
24the specific grounds upon which the claim is disapproved. The
25franchisor shall provide a reasonable appeal process allowing the
26franchisee a reasonable period of not less than 30 days after receipt
27of the written disapproval notice to respond to any disapproval
28with additional supporting documentation or information rebutting
29the disapproval and to cure any material noncompliance, with the
30period to be commensurate with the volume of claims under
31consideration. If the franchisee rebuts any disapproval and cures
32any material noncompliance relating to a claim before the
33applicable deadline, the franchisor shall notbegin delete charge backend delete
34begin insert chargebackend insert the franchisee for that claim.

35(4) If the franchisee provides additional supporting
36documentation or information purporting to rebut the disapproval,
37attempts to cure noncompliance relating to the claim, or otherwise
38appeals denial of the claim, and the franchisor continues to deny
39the claim, the franchisor shall provide the franchisee with a written
40notification of the final denial within 30 days of completion of the
P9    1appeal process, which shall conspicuously state “Final Denial” on
2the first page.

3(5) The franchisor shall notbegin delete charge backend deletebegin insert chargebackend insert the
4franchisee until 45 days after the franchisee receives the written
5notice described in paragraph (3) or (4), whichever is later. If the
6franchisee cures any material noncompliance relating to a claim,
7the franchisor shall notbegin delete charge backend deletebegin insert chargebackend insert the dealer for that
8claim. Any chargeback to a franchisee under Section 11760 shall
9be made within 90 days after the franchisee receives that written
10notice. If the board sustains the chargeback or the protest is
11dismissed, the franchisor shall have 90 days following issuance
12of the final order or the dismissal to make the chargeback, unless
13otherwise provided in a settlement agreement.

14(6) Within six months after receipt of the written notice
15described in either paragraph (3) or (4), a franchisee may file a
16protest with the board for determination of whether the franchisor
17complied with this subdivision. If the franchisee files a protest
18pursuant to this subdivision prior to the franchisor’s chargeback
19for denied claims, the franchisor shall not offset or otherwise
20undertake to collect the chargeback until the board issues a final
21order on the protest. In any protest pursuant to this subdivision,
22the franchisor shall have the burden of proof.

23(h) If a false claim was submitted by a franchisee with the intent
24to defraud the franchisor, a longer period for audit and any resulting
25chargeback may be permitted if the franchisor obtains an order
26from the board.

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

28

SEC. 4.  

Section 3066 of the Vehicle Code is amended to read:

29

3066.  

(a) Upon receiving a protest pursuant to Section 3060,
303062, 3064, 3065, 3065.1, 3065.2, 3070, 3072, 3074, 3075, or
313076, the board shall fix a time within 60 days of the order, and
32place of hearing, and shall send by registered mail a copy of the
33order to the franchisor, the protesting franchisee, and all individuals
34and groups that have requested notification by the board of protests
35and decisions of the board. Except in a case involving a franchisee
36who deals exclusively in motorcycles, the board or its executive
37director may, upon a showing of good cause, accelerate or postpone
38the date initially established for a hearing, but the hearing may not
39be rescheduled more than 90 days after the board’s initial order.
40For the purpose of accelerating or postponing a hearing date, “good
P10   1cause” includes, but is not limited to, the effects upon, and any
2irreparable harm to, the parties or interested persons or groups if
3the request for a change in hearing date is not granted. The board
4or an administrative law judge designated by the board shall hear
5and consider the oral and documented evidence introduced by the
6parties and other interested individuals and groups, and the board
7shall make its decision solely on the record so made. Chapter 4.5
8(commencing with Section 11400) of Part 1 of Division 3 of Title
92 of the Government Code and Sections 11507.3, 11507.6, 11507.7,
1011511, 11511.5, 11513, 11514, 11515, and 11517 of the
11Government Code apply to these proceedings.

12(b) In a hearing on a protest filed pursuant to Section 3060,
133062, 3070, or 3072, the franchisor shall have the burden of proof
14to establish that there is good cause to modify, replace, terminate,
15or refuse to continue a franchise. The franchisee shall have the
16burden of proof to establish that there is good cause not to enter
17into a franchise establishing or relocating an additional motor
18vehicle dealership.

19(c) Except as otherwise provided in this chapter, in a hearing
20on a protest alleging a violation of, or filed pursuant to, Section
213064, 3065, 3065.1, 3065.2, 3074, 3075, or 3076, the franchisee
22shall have the burden of proof, but the franchisor has the burden
23of proof to establish that a franchisee acted with intent to defraud
24the franchisor when that issue is material to a protest filed pursuant
25to Section 3065, 3065.1, 3065.2, 3075, or 3076.

26(d) A member of the board who is a new motor vehicle dealer
27may not participate in, hear, comment, or advise other members
28upon, or decide, a matter involving a protest filed pursuant to this
29article unless all parties to the protest stipulate otherwise.

begin delete
30

SEC. 5.  

Section 4751 of the Vehicle Code is amended to read:

31

4751.  

The department may refuse registration, or the renewal
32or transfer of registration, of a vehicle in any of the following
33events:

34(a) If the department is not satisfied that the applicant is entitled
35thereto under this code.

36(b) If the applicant has failed to furnish the department with
37information required in the application or reasonable additional
38information required by the department.

P11   1(c) If the department determines that the applicant has made or
2permitted unlawful use of any registration certificate, certificate
3of ownership, or license plates.

4(d) If the vehicle is mechanically unfit or unsafe to be operated
5or moved on the highways.

6(e) If the department determines that a manufacturer or dealer
7has failed during the current or previous year to comply with the
8provisions of this code relating to the giving of notice to the
9department of the transfer of a vehicle during the current or
10previous year.

11(f) If the department determines that a lien exists, pursuant to
12Section 9800, against one or more other vehicles in which the
13applicant has an ownership interest.

14(g) If the applicant has failed to furnish the department with an
15odometer disclosure statement pursuant to subsection (a) of Section
1632705 of Title 49 of the United States Code.

17(h) Commencing July 1, 2016, if the applicant has failed to
18 furnish the department with a recall disclosure statement pursuant
19to Section 11758.

end delete
20begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 4451 of the end insertbegin insertVehicle Codeend insertbegin insert is amended to read:end insert

21

4451.  

begin insert(a)end insertbegin insertend insert The certificate of ownership shall contain all of the
22following:

begin delete

23(a)

end delete

24begin insert(1)end insert Not less than the information required upon the face of the
25registration card.

begin delete

26(b)

end delete

27begin insert(2)end insert Provision for notice to the department of a transfer of the
28title or interest of the owner or legal owner.

begin delete

29(c)

end delete

30begin insert(3)end insert Provision for application for transfer of registration by the
31transferee.

begin delete

32(d)

end delete

33begin insert(4)end insert Provision for an odometer disclosure statement pursuant to
34subsection (a) of Section 32705 of Title 49 of the United States
35Code.

begin insert

36(5) Commencing July 1, 2016, or as soon thereafter as the
37department exhausts its supply of existing certificate of ownership
38forms, provision for a recall disclosure statement pursuant to
39Section 11758.

end insert
begin insert

P12   1(b) Notwithstanding paragraph (5) of subdivision (a), a
2certificate of ownership previously issued by the department prior
3to July 1, 2016, and in the possession of a registered owner remains
4valid for the transfer of registration of a vehicle.

end insert
5

SEC. 6.  

Section 11713.3 of the Vehicle Code is amended to
6read:

7

11713.3.  

It is unlawful and a violation of this code for a
8manufacturer, manufacturer branch, distributor, or distributor
9branch licensed pursuant to this code to do, directly or indirectly
10through an affiliate, any of the following:

11(a) To refuse or fail to deliver in reasonable quantities and within
12a reasonable time after receipt of an order from a dealer having a
13franchise for the retail sale of a new vehicle sold or distributed by
14the manufacturer or distributor, a new vehicle or parts or
15accessories to new vehicles as are covered by the franchise, if the
16vehicle, parts, or accessories are publicly advertised as being
17available for delivery or actually being delivered. This subdivision
18is not violated, however, if the failure is caused by acts or causes
19beyond the control of the manufacturer, manufacturer branch,
20distributor, or distributor branch.

21(b) To prevent or require, or attempt to prevent or require, by
22contract or otherwise, a change in the capital structure of a
23dealership or the means by or through which the dealer finances
24the operation of the dealership, if the dealer at all times meets
25reasonable capital standards agreed to by the dealer and the
26manufacturer or distributor, and if a change in capital structure
27does not cause a change in the principal management or have the
28effect of a sale of the franchise without the consent of the
29manufacturer or distributor.

30(c) To prevent or require, or attempt to prevent or require, a
31dealer to change the executive management of a dealership, other
32than the principal dealership operator or operators, if the franchise
33was granted to the dealer in reliance upon the personal
34qualifications of that person.

35(d) (1) Except as provided in subdivision (t), to prevent or
36require, or attempt to prevent or require, by contract or otherwise,
37a dealer, or an officer, partner, or stockholder of a dealership, the
38sale or transfer of a part of the interest of any of them to another
39person. A dealer, officer, partner, or stockholder shall not, however,
40have the right to sell, transfer, or assign the franchise, or a right
P13   1thereunder, without the consent of the manufacturer or distributor
2except that the consent shall not be unreasonably withheld.

3(2) (A) For the transferring franchisee to fail, prior to the sale,
4transfer, or assignment of a franchisee or the sale, assignment, or
5transfer of all, or substantially all, of the assets of the franchised
6business or a controlling interest in the franchised business to
7another person, to notify the manufacturer or distributor of the
8franchisee’s decision to sell, transfer, or assign the franchise. The
9notice shall be in writing and shall include all of the following:

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

11(ii) A copy of all of the agreements relating to the sale,
12assignment, or transfer of the franchised business or its assets.

13(iii) The proposed transferee’s application for approval to
14become the successor franchisee. The application shall include
15forms and related information generally utilized by the
16manufacturer or distributor in reviewing prospective franchisees,
17if those forms are readily made available to existing franchisees.
18As soon as practicable after receipt of the proposed transferee’s
19application, the manufacturer or distributor shall notify the
20franchisee and the proposed transferee of information needed to
21make the application complete.

22(B) For the manufacturer or distributor, to fail, on or before 60
23days after the receipt of all of the information required pursuant
24to subparagraph (A), or as extended by a written agreement
25between the manufacturer or distributor and the franchisee, to
26notify the franchisee of the approval or the disapproval of the sale,
27transfer, or assignment of the franchise. The notice shall be in
28writing and shall be personally served or sent by certified mail,
29return receipt requested, or by guaranteed overnight delivery
30service that provides verification of delivery and shall be directed
31to the franchisee. A proposed sale, assignment, or transfer shall
32be deemed approved, unless disapproved by the franchisor in the
33manner provided by this subdivision. If the proposed sale,
34assignment, or transfer is disapproved, the franchisor shall include
35in the notice of disapproval a statement setting forth the reasons
36for the disapproval.

37(3) In an action in which the manufacturer’s or distributor’s
38withholding of consent under this subdivision or subdivision (e)
39is an issue, whether the withholding of consent was unreasonable
P14   1is a question of fact requiring consideration of all the existing
2circumstances.

3(e) To prevent, or attempt to prevent, a dealer from receiving
4fair and reasonable compensation for the value of the franchised
5business. There shall not be a transfer or assignment of the dealer’s
6franchise without the consent of the manufacturer or distributor,
7which consent shall not be unreasonably withheld or conditioned
8upon the release, assignment, novation, waiver, estoppel, or
9modification of a claim or defense by the dealer.

10(f) To obtain money, goods, services, or another benefit from
11a person with whom the dealer does business, on account of, or in
12relation to, the transaction between the dealer and that other person,
13other than for compensation for services rendered, unless the
14benefit is promptly accounted for, and transmitted to, the dealer.

15(g) (1) Except as provided in paragraph (3), to obtain from a
16dealer or enforce against a dealer an agreement, provision, release,
17assignment, novation, waiver, or estoppel that does any of the
18following:

19(A) Modifies or disclaims a duty or obligation of a manufacturer,
20manufacturer branch, distributor, distributor branch, or
21representative, or a right or privilege of a dealer, pursuant to
22Chapter 4 (commencing with Section 11700) of Division 5 or
23Chapter 6 (commencing with Section 3000) of Division 2.

24(B) Limits or constrains the right of a dealer to file, pursue, or
25submit evidence in connection with a protest before the board.

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

27(D) Requires a controversy between a manufacturer,
28manufacturer branch, distributor, distributor branch, or
29representative and a dealer to be referred to a person for a binding
30determination. However, this subparagraph does not prohibit
31arbitration before an independent arbitrator, provided that whenever
32a motor vehicle franchise contract provides for the use of arbitration
33to resolve a controversy arising out of, or relating to, that contract,
34arbitration may be used to settle the controversy only if, after the
35controversy arises, all parties to the controversy consent in writing
36to use arbitration to settle the controversy. For the purpose of this
37subparagraph, the terms “motor vehicle” and “motor vehicle
38franchise contract” shall have the same meaning as defined in
39Section 1226 of Title 15 of the United States Code. If arbitration
40is elected to settle a dispute under a motor vehicle franchise
P15   1contract, the arbitrator shall provide the parties to the arbitration
2with a written explanation of the factual and legal basis for the
3award.

4(2) An agreement, provision, release, assignment, novation,
5waiver, or estoppel prohibited by this subdivision shall be
6unenforceable and void.

7(3) This subdivision does not do any of the following:

8(A) Limit or restrict the terms upon which parties to a protest
9before the board, civil action, or other proceeding can settle or
10resolve, or stipulate to evidentiary or procedural matters during
11the course of, a protest, civil action, or other proceeding.

12(B) Affect the enforceability of any stipulated order or other
13order entered by the board.

14(C) Affect the enforceability of any provision in a contract if
15the provision is not prohibited under this subdivision or any other
16law.

17(D) Affect the enforceability of a provision in any contract
18entered into on or before December 31, 2011.

19(E) Prohibit a dealer from waiving its right to file a protest
20pursuant to Section 3065.1 if the waiver agreement is entered into
21after a franchisor incentive program claim has been disapproved
22by the franchisor and the waiver is voluntarily given as part of an
23agreement to settle that claim.

24(F) Prohibit a voluntary agreement supported by valuable
25consideration, other than granting or renewing a franchise, that
26does both of the following:

27(i) Provides that a dealer establish or maintain exclusive
28facilities, personnel, or display space or provides that a dealer
29make a material alteration, expansion, or addition to a dealership
30facility.

31(ii) Contains no waiver or other provision prohibited by
32subparagraph (A), (B), (C), or (D) of paragraph (1).

33(G) Prohibit an agreement separate from the franchise agreement
34that implements a dealer’s election to terminate the franchise if
35the agreement is conditioned only on a specified time for
36termination or payment of consideration to the dealer.

37(H) (i) Prohibit a voluntary waiver agreement, supported by
38valuable consideration, other than the consideration of renewing
39a franchise, to waive the right of a dealer to file a protest under
40Section 3062 for the proposed establishment or relocation of a
P16   1specific proposed dealership, if the waiver agreement provides all
2of the following:

3(I) The approximate address at which the proposed dealership
4will be located.

5(II) The planning potential used to establish the proposed
6dealership’s facility, personnel, and capital requirements.

7(III) An approximation of projected vehicle and parts sales, and
8number of vehicles to be serviced at the proposed dealership.

9(IV) Whether the franchisor or affiliate will hold an ownership
10interest in the proposed dealership or real property of the proposed
11dealership, and the approximate percentage of any franchisor or
12affiliate ownership interest in the proposed dealership.

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

14(VI) If known at the time the waiver agreement is executed, the
15identity of the dealer who will operate the proposed dealership.

16(VII) The date the waiver agreement is to expire, which may
17not be more than 30 months after the date of execution of the
18waiver agreement.

19(ii) Notwithstanding the provisions of a waiver agreement
20entered into pursuant to the provisions of this subparagraph, a
21dealer may file a protest under Section 3062 if any of the
22information provided pursuant to clause (i) has become materially
23inaccurate since the waiver agreement was executed. Any
24determination of the enforceability of a waiver agreement shall be
25determined by the board and the franchisor shall have the burden
26 of proof.

27(h) To increase prices of motor vehicles that the dealer had
28ordered for private retail consumers prior to the dealer’s receipt
29of the written official price increase notification. A sales contract
30signed by a private retail consumer is evidence of the order. In the
31event of manufacturer price reductions, the amount of the reduction
32received by a dealer shall be passed on to the private retail
33consumer by the dealer if the retail price was negotiated on the
34basis of the previous higher price to the dealer. Price reductions
35apply to all vehicles in the dealer’s inventory that were subject to
36the price reduction. Price differences applicable to new model or
37series motor vehicles at the time of the introduction of new models
38or series shall not be considered a price increase or price decrease.
39This subdivision does not apply to price changes caused by either
40of the following:

P17   1(1) The addition to a motor vehicle of required or optional
2equipment pursuant to state or federal law.

3(2) Revaluation of the United States dollar in the case of a
4foreign-make vehicle.

5(i) To fail to pay to a dealer, within a reasonable time following
6receipt of a valid claim by a dealer thereof, a payment agreed to
7be made by the manufacturer or distributor to the dealer by reason
8of the fact that a new vehicle of a prior year model is in the dealer’s
9inventory at the time of introduction of new model vehicles.

10(j) To deny the widow, widower, or heirs designated by a
11deceased owner of a dealership the opportunity to participate in
12the ownership of the dealership or successor dealership under a
13valid franchise for a reasonable time after the death of the owner.

14(k) To offer refunds or other types of inducements to a person
15for the purchase of new motor vehicles of a certain line-make to
16be sold to the state or a political subdivision of the state without
17making the same offer to all other dealers in the same line-make
18within the relevant market area.

19(l) To modify, replace, enter into, relocate, terminate, or refuse
20to renew a franchise in violation of Article 4 (commencing with
21Section 3060) of Chapter 6 of Division 2.

22(m) To employ a person as a representative who has not been
23licensed pursuant to Article 3 (commencing with Section 11900)
24of Chapter 4 of Division 5.

25(n) To deny a dealer the right of free association with another
26dealer for a lawful purpose.

27(o) (1) To compete with a dealer in the same line-make
28operating under an agreement or franchise from a manufacturer
29or distributor in the relevant market area.

30(2) A manufacturer, branch, or distributor or an entity that
31controls or is controlled by, a manufacturer, branch, or distributor,
32shall not, however, be deemed to be competing in the following
33limited circumstances:

34(A) Owning or operating a dealership for a temporary period,
35not to exceed one year at the location of a former dealership of the
36same line-make that has been out of operation for less than six
37months. However, after a showing of good cause by a
38manufacturer, branch, or distributor that it needs additional time
39to operate a dealership in preparation for sale to a successor
40independent franchisee, the board may extend the time period.

P18   1(B) Owning an interest in a dealer as part of a bona fide dealer
2development program that satisfies all of the following
3requirements:

4(i) The sole purpose of the program is to make franchises
5available to persons lacking capital, training, business experience,
6or other qualities ordinarily required of prospective franchisees
7and the dealer development candidate is an individual who is
8unable to acquire the franchise without assistance of the program.

9(ii) The dealer development candidate has made a significant
10investment subject to loss in the franchised business of the dealer.

11(iii) The program requires the dealer development candidate to
12manage the day-to-day operations and business affairs of the dealer
13and to acquire, within a reasonable time and on reasonable terms
14and conditions, beneficial ownership and control of a majority
15interest in the dealer and disassociation of any direct or indirect
16ownership or control by the manufacturer, branch, or distributor.

17(C) Owning a wholly owned subsidiary corporation of a
18distributor that sells motor vehicles at retail, if, for at least three
19years prior to January 1, 1973, the subsidiary corporation has been
20a wholly owned subsidiary of the distributor and engaged in the
21sale of vehicles at retail.

22(3) (A) A manufacturer, branch, and distributor that owns or
23operates a dealership in the manner described in subparagraph (A)
24of paragraph (2) shall give written notice to the board, within 10
25days, each time it commences or terminates operation of a
26dealership and each time it acquires, changes, or divests itself of
27an ownership interest.

28(B) A manufacturer, branch, and distributor that owns an interest
29in a dealer in the manner described in subparagraph (B) of
30paragraph (2) shall give written notice to the board, annually, of
31the name and location of each dealer in which it has an ownership
32interest, the name of the bona fide dealer development owner or
33owners, and the ownership interests of each owner expressed as a
34percentage.

35(p) To unfairly discriminate among its franchisees with respect
36to warranty reimbursement or authority granted to its franchisees
37to make warranty adjustments with retail customers.

38(q) To sell vehicles to a person not licensed pursuant to this
39chapter for resale.

P19   1(r) To fail to affix an identification number to a park trailer, as
2described in Section 18009.3 of the Health and Safety Code, that
3is manufactured on or after January 1, 1987, and that does not
4clearly identify the unit as a park trailer to the department. The
5configuration of the identification number shall be approved by
6the department.

7(s) To dishonor a warranty, rebate, or other incentive offered
8to the public or a dealer in connection with the retail sale of a new
9motor vehicle, based solely upon the fact that an autobroker
10arranged or negotiated the sale. This subdivision shall not prohibit
11the disallowance of that rebate or incentive if the purchaser or
12dealer is ineligible to receive the rebate or incentive pursuant to
13any other term or condition of a rebate or incentive program.

14(t) To exercise a right of first refusal or other right requiring a
15franchisee or an owner of the franchise to sell, transfer, or assign
16to the franchisor, or to a nominee of the franchisor, all or a material
17part of the franchised business or of the assets of the franchised
18business unless all of the following requirements are met:

19(1) The franchise authorizes the franchisor to exercise a right
20of first refusal to acquire the franchised business or assets of the
21franchised business in the event of a proposed sale, transfer, or
22assignment.

23(2) The franchisor gives written notice of its exercise of the
24right of first refusal no later than 45 days after the franchisor
25receives all of the information required pursuant to subparagraph
26(A) of paragraph (2) of subdivision (d).

27(3) The sale, transfer, or assignment being proposed relates to
28not less than all or substantially all of the assets of the franchised
29business or to a controlling interest in the franchised business.

30(4) The proposed transferee is neither a family member of an
31owner of the franchised business, nor a managerial employee of
32the franchisee owning 15 percent or more of the franchised
33business, nor a corporation, partnership, or other legal entity owned
34by the existing owners of the franchised business. For purposes of
35this paragraph, a “family member” means the spouse of an owner
36of the franchised business, the child, grandchild, brother, sister,
37or parent of an owner, or a spouse of one of those family members.
38This paragraph does not limit the rights of the franchisor to
39disapprove a proposed transferee as provided in subdivision (d).

P20   1(5) Upon the franchisor’s exercise of the right of first refusal,
2the consideration paid by the franchisor to the franchisee and
3owners of the franchised business shall equal or exceed all
4consideration that each of them were to have received under the
5terms of, or in connection with, the proposed sale, assignment, or
6transfer, and the franchisor shall comply with all the terms and
7conditions of the agreement or agreements to sell, transfer, or
8assign the franchised business.

9(6) The franchisor shall reimburse the proposed transferee for
10expenses paid or incurred by the proposed transferee in evaluating,
11investigating, and negotiating the proposed transfer to the extent
12those expenses do not exceed the usual, customary, and reasonable
13fees charged for similar work done in the area in which the
14franchised business is located. These expenses include, but are not
15limited to, legal and accounting expenses, and expenses incurred
16for title reports and environmental or other investigations of real
17property on which the franchisee’s operations are conducted. The
18proposed transferee shall provide the franchisor a written
19itemization of those expenses, and a copy of all nonprivileged
20reports and studies for which expenses were incurred, if any, within
2130 days of the proposed transferee’s receipt of a written request
22from the franchisor for that accounting. The franchisor shall make
23payment within 30 days of exercising the right of first refusal.

24(u) (1) To unfairly discriminate in favor of a dealership owned
25or controlled, in whole or in part, by a manufacturer or distributor
26or an entity that controls or is controlled by the manufacturer or
27distributor. Unfair discrimination includes, but is not limited to,
28the following:

29(A) The furnishing to a franchisee or dealer that is owned or
30controlled, in whole or in part, by a manufacturer, branch, or
31distributor of any of the following:

32(i) A vehicle that is not made available to each franchisee
33pursuant to a reasonable allocation formula that is applied
34uniformly, and a part or accessory that is not made available to all
35franchisees on an equal basis when there is no reasonable allocation
36formula that is applied uniformly.

37(ii) A vehicle, part, or accessory that is not made available to
38each franchisee on comparable delivery terms, including the time
39of delivery after the placement of an order. Differences in delivery
40terms due to geographic distances or other factors beyond the
P21   1control of the manufacturer, branch, or distributor shall not
2constitute unfair competition.

3(iii) Information obtained from a franchisee by the manufacturer,
4branch, or distributor concerning the business affairs or operations
5of a franchisee in which the manufacturer, branch, or distributor
6does not have an ownership interest. The information includes,
7but is not limited to, information contained in financial statements
8and operating reports, the name, address, or other personal
9information or buying, leasing, or service behavior of a dealer
10customer, and other information that, if provided to a franchisee
11or dealer owned or controlled by a manufacturer or distributor,
12would give that franchisee or dealer a competitive advantage. This
13clause does not apply if the information is provided pursuant to a
14subpoena or court order, or to aggregated information made
15available to all franchisees.

16(iv) Sales or service incentives, discounts, or promotional
17programs that are not made available to all California franchises
18of the same line-make on an equal basis.

19(B) Referring a prospective purchaser or lessee to a dealer in
20which a manufacturer, branch, or distributor has an ownership
21interest, unless the prospective purchaser or lessee resides in the
22area of responsibility assigned to that dealer or the prospective
23 purchaser or lessee requests to be referred to that dealer.begin delete For
24purposes of this subparagraph, the term “area of responsibility”
25means a geographic area specified in a franchise that is used by
26the franchisor for the purpose of evaluating the franchisee’s
27performance of its sales and service obligations.end delete

28(2) This subdivision does not prohibit a franchisor from granting
29a franchise to prospective franchisees or assisting those franchisees
30during the course of the franchise relationship as part of a program
31or programs to make franchises available to persons lacking capital,
32training, business experience, or other qualifications ordinarily
33required of prospective franchisees.

34(v) (1) To access, modify, or extract information from a
35confidential dealer computer record, as defined in Section
3611713.25, without obtaining the prior written consent of the dealer
37and without maintaining administrative, technical, and physical
38safeguards to protect the security, confidentiality, and integrity of
39the information.

P22   1(2) Paragraph (1) does not limit a duty that a dealer may have
2to safeguard the security and privacy of records maintained by the
3dealer.

4(w) (1) To use electronic, contractual, or other means to prevent
5or interfere with any of the following:

6(A) The lawful efforts of a dealer to comply with federal and
7state data security and privacy laws.

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

9(i) Ensure that specific data accessed from the dealer’s computer
10system is within the scope of consent specified in subdivision (v).

11(ii) Monitor specific data accessed from or written to the dealer’s
12computer system.

13(2) Paragraph (1) does not limit a duty that a dealer may have
14to safeguard the security and privacy of records maintained by the
15dealer.

16(x) (1) To unfairly discriminate against a franchisee selling a
17service contract, debt cancellation agreement, maintenance
18agreement, or similar product not approved, endorsed, sponsored,
19or offered by the manufacturer, manufacturer branch, distributor,
20or distributor branch or affiliate. For purposes of this subdivision,
21unfair discrimination includes, but is not limited to, any of the
22following:

23(A) Express or implied statements that the dealer is under an
24obligation to exclusively sell or offer to sell service contracts, debt
25cancellation agreements, or similar products approved, endorsed,
26sponsored, or offered by the manufacturer, manufacturer branch,
27distributor, or distributor branch or affiliate.

28(B) Express or implied statements that selling or offering to sell
29service contracts, debt cancellation agreements, maintenance
30agreements, or similar products not approved, endorsed, sponsored,
31or offered by the manufacturer, manufacturer branch, distributor,
32or distributor branch or affiliate, or the failure to sell or offer to
33sell service contracts, debt cancellation agreements, maintenance
34agreements, or similar products approved, endorsed, sponsored,
35or offered by the manufacturer, manufacturer branch, distributor,
36or distributor branch or affiliate will have any negative
37consequences for the dealer.

38(C) Measuring a dealer’s performance under a franchise
39 agreement based upon the sale of service contracts, debt
40cancellation agreements, or similar products approved, endorsed,
P23   1sponsored, or offered by the manufacturer, manufacturer branch,
2distributor, or distributor branch or affiliate.

3(D) Requiring a dealer to actively promote the sale of service
4contracts, debt cancellation agreements, or similar products
5approved, endorsed, sponsored, or offered by the manufacturer,
6manufacturer branch, distributor, or distributor branch or affiliate.

7(E) Conditioning access to vehicles or parts, or vehicle sales or
8service incentives upon the sale of service contracts, debt
9cancellation agreements, or similar products approved, endorsed,
10sponsored, or offered by the manufacturer, manufacturer branch,
11distributor, or distributor branch or affiliate.

12(2) Unfair discrimination does not include, and nothing shall
13prohibit a manufacturer from, offering an incentive program to
14vehicle dealers who voluntarily sell or offer to sell service
15contracts, debt cancellation agreements, or similar products
16approved, endorsed, sponsored, or offered by the manufacturer,
17manufacturer branch, distributor, or distributor branch or affiliate,
18if the program does not provide vehicle sales or service incentives.

19(3) This subdivision does not prohibit a manufacturer,
20manufacturer branch, distributor, or distributor branch from
21requiring a franchisee that sells a used vehicle as “certified” under
22a certified used vehicle program established by the manufacturer,
23manufacturer branch, distributor, or distributor branch to provide
24a service contract approved, endorsed, sponsored, or offered by
25the manufacturer, manufacturer branch, distributor, or distributor
26branch.

27(4) Unfair discrimination does not include, and nothing shall
28prohibit a franchisor from requiring a franchisee to provide, the
29following notice prior to the sale of the service contract if the
30service contract is not provided or backed by the franchisor and
31the vehicle is of the franchised line-make:
32
33“Service Contract Disclosure
34The service contract you are purchasing is not provided or backed
35by the manufacturer of the vehicle you are purchasing. The
36manufacturer of the vehicle is not responsible for claims or repairs
37under this service contract.
38_____________________
39Signature of Purchaser”


P24   1(y) To take or threaten to take any adverse action against a dealer
2pursuant to an export or sale-for-resale prohibition because the
3dealer sold or leased a vehicle to a customer who either exported
4the vehicle to a foreign country or resold the vehicle in violation
5of the prohibition, unless the export or sale-for-resale prohibition
6policy was provided to the dealer in writing prior to the sale or
7lease, and the dealer knew or reasonably should have known of
8the customer’s intent to export or resell the vehicle in violation of
9the prohibition at the time of sale or lease. If the dealer causes the
10vehicle to be registered in this or any other state, and collects or
11causes to be collected any applicable sales or use tax due to this
12state, a rebuttable presumption is established that the dealer did
13not have reason to know of the customer’s intent to export or resell
14the vehicle.

begin insert

15(z) For purposes of this section, the term “area of
16responsibility” means a geographic area specified in a franchise
17that is used by the franchisor for the purpose of evaluating the
18franchisee’s performance of its sales and service obligations.

end insert
begin delete

22 19(z)

end delete

20begin insert(aa)end insert Commencing July 1, 2016, to unfairly discriminate among
21its franchisees with respect to reimbursement or authority granted
22to its franchisees pursuant to subdivision (c) or (d) of Section
2311760.

24

SEC. 7.  

Article 1.1 (commencing with Section 11750) is added
25to Chapter 4 of Division 5 of the Vehicle Code, to read:

26 

27Article 1.1.  Consumer Automotive Recall Safety Act
28

 

29

11750.  

This article shall be known, and may be cited, as the
30Consumer Automotive Recall Safety Act (CARS Act).

31

11752.  

As used in this article, the following definitions apply:

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

33(b) (1) A “manufacturer’s recall” is a recall conducted pursuant
34to Sections 30118 to 30120, inclusive, of Title 49 of the United
35States Code, the National Highway Traffic and Motor Vehicle
36Safety Act (49 U.S.C. Sec. 30101, et seq.).

37(2) A manufacturer’s recall does not include a service campaign
38or emission recall when the vehicle manufacturer or the National
39Highway Traffic Safety Administration has not issued a recall
40notice to owners of affected vehicles, pursuant to Section 30118
P25   1of Title 49 of the United States Code, the National Highway Traffic
2and Motor Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.). A
3manufacturer’s recall does not include a Stop Sale - Stop Drive
4recall.

5(c) The term “new motor vehicle dealer” has the same meaning
6as in Section 426.

7(d) A “recall database” is a database from which an individual
8may obtain vehicle identification number (VIN) specific Stop Sale
9- Stop Drive recall and manufacturer’s recall information relevant
10to a specific vehicle.

11(1) For a vehicle manufacturer that is not subject to the
12regulations adopted pursuant to Section 31301 of the federal
13Moving Ahead for Progress in the 21st Century Act (Public Law
14112-141), a recall database is one of the following:

15(A) The recall data on a vehicle manufacturer’s Internet Web
16site for a specific vehicle’s line-make.

17(B) The recall data in a vehicle manufacturer’s internal system
18that provides information to its franchisees on vehicles subject to
19recall.

20(C) The recall data in subparagraph (A) or (B) that is contained
21in a commercially available vehicle history system.

22(2) For a vehicle manufacturer that is subject to the regulations
23adopted pursuant to Section 31301 of the federal Moving Ahead
24for Progress in the 21st Century Act (Public Law 112-141), a recall
25database shall include, at a minimum, the recall information
26required pursuant to Section 573.15 of Title 49 of the Code of
27Federal Regulations.

28(e) A “recall database report” is a report, specific to a vehicle
29that is identified by its VIN, containing information obtained from
30a recall database.

31(f) A “rental car company” is a person or entity in the business
32of renting passenger vehicles to the public in California.

33(g) A “Stop Sale - Stop Drive recall” is a recall notice provided
34to owners of affected vehicles, pursuant to Sections 30118 to
3530120, inclusive, of Title 49 of the United States Code, the National
36Highway Traffic and Motor Vehicle Safety Act (49 U.S.C. Sec.
3730101, et seq.), when the vehicle manufacturer or the National
38Highway Traffic Safety Administration informs the dealer to stop
39the sale of the vehicle or containsbegin delete preremedyend deletebegin insert anyend insert precaution advice
40to the owner to stop operating the vehicle.

P26   1(h) A “vehicle manufacturer” is a person who manufactures,
2assembles, or distributes new motor vehicles, sold or leased, that
3are subject to registration under this code.

4

11754.  

(a) A dealer shall not display or offer for sale at retail
5a used vehicle, as defined in Section 665, that is subject to
6registration under this code, unless the dealer has obtained a recall
7database report within 30 days of the display or offer.

8(b) If a recall database report obtained by a dealer indicates that
9a used vehicle is subject to a Stop Sale - Stop Drive recall, the
10dealer shall not sell or lease that vehicle at retail until the recall
11repair has been made.

12(c) If a recall database report obtained by a dealer indicates that
13a used vehicle is subject to a manufacturer’s recall and the used
14vehicle is of the same line-make as the franchise of the new motor
15vehicle dealer, the dealer shall not sell or lease that vehicle at retail
16until the recall repair has been made.

17(d) If a recall database report obtained by a dealer indicates that
18a used vehicle is subject to a manufacturer’s recall and the used
19vehicle is not of the same line-make as the franchise of the new
20motor vehicle dealer or the dealer does not have a franchise, the
21dealer may sell or lease the vehicle at retail if all of the following
22are satisfied:

23(1) The dealer discloses the manufacturer’s recall by providing
24a copy of the recall database report to the consumer prior to sale
25or lease.

26(2) The consumer signs the disclosure acknowledging that the
27 vehicle has a manufacturer’s recall and that the consumer can get
28the recall repaired at no cost to the consumer at a new motor vehicle
29dealer of the vehicle’s line-make.

30(e) To comply with subdivision (d), and notwithstanding Section
312981.9 of the Civil Code, a recall database report, that indicates
32the vehicle is subject to a manufacturer’s recall and the recall repair
33has not been made, shall be disclosed and the disclosure signed
34by the consumer in a document separate from the conditional sales
35contract or other vehicle purchase agreement.

36(f) The disclosure by a dealer, and receipt and acknowledgment
37by the consumer, of the information specified in subdivisions (d)
38and (e) has no legal effect other than to demonstrate compliance
39by the dealer with the requirements prescribed in those
40subdivisions. Nothing in this article shall be interpreted to place
P27   1consumers in a less advantageous legal position for having received
2or signed the disclosures provided pursuant to this article than if
3no disclosure had been made.

4

11756.  

(a) No later than 48 hours after receiving a notice of a
5recall conducted pursuant to Sections 30118 to 30120, inclusive,
6of Title 49 of the United States Code, the National Highway Traffic
7and Motor Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.), or
8sooner if practicable, a rental car company is prohibited from
9renting or offering for rent any vehicle subject to that recall.

10(b) If a recall notification indicates that the remedy for the recall
11is not immediately available and specifies actions to temporarily
12repair the vehicle in a manner to eliminate the safety risk that
13prompted the recall, the rental car company, after having the repairs
14completed, may rent the vehicle. Once the remedy for the rental
15vehicle becomes available to the rental car company, the rental
16car company may not rent the vehicle until the vehicle has been
17repaired.

begin delete
18

11758.  

(a) The department may refuse transfer of registration
19of a motor vehicle under this code unless the transferee, in
20submitting an application to the department for title, includes with
21the application a statement signed and dated by the transferor
22acknowledging that all Stop Sale - Stop Drive recalls and
23manufacturer’s recalls were disclosed to the transferee as provided
24in subdivision (c).

25(b) If the title to a motor vehicle issued to a transferor is in the
26possession of a lienholder when the transferor transfers ownership
27of the vehicle, the transferor may use a written power of attorney
28in making the recall disclosure required under subdivision (c).

29(c) A transferor transferring registration of a motor vehicle shall
30disclose, in writing, to the transferee all Stop Sale - Stop Drive
31recalls and manufacturer’s recalls. A person acquiring the vehicle
32shall not accept a vehicle transfer and reassignment document
33unless it is complete.

34(d) Subdivisions (a), (b), and (c) do not apply to the transfer of
35a motor vehicle to a dealer or wholesaler.

end delete
begin insert
36

begin insert11758.end insert  

Commencing July 1, 2016, or as soon thereafter as the
37department exhausts its supply of existing certificate of ownership
38forms, the department shall include the following recall disclosure
39statement on the certificate of ownership and bill of sale form for
40private transactions:


P28   2“This vehicle may have an unrepaired manufacturer’s recall.
3Please ask the seller if there is an unrepaired manufacturer’s recall
4on this vehicle. You can check for any recalls and how to get the
5recall repaired at the National Highway Traffic Safety
6Administration’s website.”

end insert
7

11760.  

(a) A vehicle manufacturer shall clearly and
8conspicuously display on its Internet Web site and in all recall
9notifications pursuant to Section 30118 of Title 49 of the United
10States Code, the National Highway Traffic and Motor Vehicle
11Safety Act (49 U.S.C. Sec. 30101, et seq.), whether a vehicle is
12subject to a Stop Sale - Stop Drive recall.

13(b) When a consumer seeks to repair a vehicle subject to a Stop
14Sale - Stop Drive recall or manufacturer’s recall as identified in
15a recall database report and the parts or procedures for the repair
16are not yet available, the vehicle manufacturer shall, upon request
17by the consumer, provide a rental or loaner vehicle to the consumer
18at no cost to the consumer until the recall repair has been made.
19 The consumer shall not be provided with a rental or loaner vehicle
20that is subject to a Stop Sale - Stop Drive recall or a manufacturer’s
21recall.

22(c) If a vehicle manufacturer requires a franchisee to provide a
23rental or loaner vehicle to a consumer under subdivision (b), the
24vehicle manufacturer shall adequately and fairly compensate the
25franchisee for all costs incurred in providing a loaner or rental
26vehicle to a consumer. For purposes of this paragraph, adequate
27and fair compensation shall be the average daily rental amount
28of____ dollars ($____) for each day a consumer uses a loaner or
29rental vehicle.

30(d) A vehicle manufacturer shall adequately and fairly
31compensate each of its franchisees for all costs incurred in storing
32vehicles with a Stop Sale - Stop Drive recall or manufacturer’s
33recall in the franchisee’s possession if the parts or procedures are
34not yet available to repair the recall of the vehicle. For purposes
35of this paragraph, adequate and fair compensation shall be the
36average daily amount of ____ dollars ($_____) for each day a
37vehicle subject to a Stop Sale - Stop Drive recall or manufacturer’s
38recall is in the franchisee’s possession, the parts or procedures are
39not yet available to repair the recall of the vehicle, and the recall
40repair has not been made.

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11762.  

(a) This article shall not create any legal duty upon the
2dealer, franchisee, rental car company, or private seller related to
3the accuracy, errors, or omissions contained in a recall database
4report or any legal duty to provide information added to a recall
5database after the dealer, franchisee, rental car company, or private
6seller obtained the recall database report pursuant to Sections
711754, 11756, and 11758. Nothing in this article shall affect any
8legal rights, claims, or remedies otherwise available under law.

9(b) The provisions of this article are severable. If any provision
10of this article or its application is held invalid, that invalidity shall
11not affect other provisions or applications that can be given effect
12without the invalid provision or application.

13(c) This article does not apply to the sale of a recreational
14vehicle, a motorcycle, an off-highway motor vehicle subject to
15identification under Section 38010, a vehicle sold by a dismantler
16after being reported for dismantling pursuant to Section 11520, or
17a vehicle sold by a salvage pool after obtaining a salvage pool
18certificate pursuant to Section 11515 or a nonrepairable vehicle
19certificate issued pursuant to Section 11515.2.

20(d) This article shall become operative on July 1, 2016.

21

SEC. 8.  

No reimbursement is required by this act pursuant to
22Section 6 of Article XIII B of the California Constitution because
23the only costs that may be incurred by a local agency or school
24district will be incurred because this act creates a new crime or
25infraction, eliminates a crime or infraction, or changes the penalty
26for a crime or infraction, within the meaning of Section 17556 of
27the Government Code, or changes the definition of a crime within
28the meaning of Section 6 of Article XIII B of the California
29Constitution.



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