OHIO SUPREME COURT SETS IMPORTANT PRECEDENT FOR VEHICLE TRANSFERORS
The Supreme Court of Ohio recently published its decision in State of Ohio ex rel. Cordray v. Midway Motor Sales, Inc., 2009-Ohio-2610, which involved an appeal by GMAC against lower court rulings that GMAC violated Ohio’s Odometer Rollback and Disclosure Act (“ORDA”). GMAC fought the rulings all the way to the state’s top court and its persistence paid off: the unanimous decision of the Court closely follows the propositions of law GMAC advanced in its appeal. Our firm represented four trade associations (the American Financial Services Association, the Association of Consumer Vehicle Lessors, the National Automobile Dealers Association and the Ohio Automobile Dealers Association) as amici curiae (“friends of the court”) in support of GMAC.
The appeal focused on odometer disclosures made by GMAC in connection with the sale of off-lease vehicles. The odometer disclosures did not reflect actual mileage because the leasing dealer (who had owned the vehicles before GMAC) tampered with the odometers without GMAC’s knowledge. When GMAC discovered the tampering, it promptly notified law enforcement and remediated affected consumers.
The Ohio Attorney General nonetheless filed suit against GMAC for violation of R.C. 4549.46 of the ORDA for failure to provide true odometer disclosures. The trial court granted summary judgment against GMAC based on Ohio appellate case law holding that R.C. 4549.46 is a strict-liability statute. The appellate court upheld the grant of summary judgment, similarly finding that a transferor may be liable for violation of R.C. 4549.46 without proof of mental culpability. Both courts also held that an exception for violations committed by a previous owner did not apply to GMAC because the previous owner (the leasing dealer) did not own the vehicles at the time of the violation.
The Supreme Court held that (i) R.C. 4549.46 is not a strict-liability statute and liability can be imposed only if it is established that the defendant knowingly violated the statute and (ii) the previous-owner exception applies to a transferor regardless of when a previous owner tampered with the odometer. This is exactly how GMAC and amici argued the ORDA should be construed.
The case is important to vehicle transferors because it clarifies the appropriate mental culpability required for odometer disclosure violations and the availability of the previous owner defense. Innocent transferors will no longer risk criminal and civil liability under the ORDA for odometer disclosures made to the best of their knowledge. The decision also reaffirms fundamental rules about construing statutes alleged to provide for strict liability and applying unambiguous statutes as written.
Contact us if you would like a copy of the decision.
- Darrell Dreher and