Supreme Court Ruling a Big Win For Car Dealers

Supreme Court Ruling a Big Win For Car Dealers

In a decision that impacts auto dealers around the country, the U.S. Supreme Court handed down a decision last week that limits damages consumers can receive from companies that violate the federal Truth In Lending Act (TILA). The court overturned an award to an Alexandria, VA, man which allowed him to recover $24,000 against a dealer.

In the case of Koons Buick, Pontiac, GMC, Inc. v. Nigh(319F.3d119,2003), the court held in an 8 to 1 decision that with loans secured by personal property such as car loans TILA entitles a consumer to recover no more than $1,000 in statutory damages, (i.e., damages which are by their nature a penalty imposed on a creditor for a TILA violation over and above or in lieu of actual damages to the consumer. Under TILA, a consumer is also entitled to recover actual damages he has sustained, as well as attorneys’ fees.

–The Supreme Court’s decision sets aside a Virginia federal district court decision, which was later affirmed by the Fourth Circuit Court of Appeals. Allowed to stand, that decision could have severely restricted the availability of consumer credit, negatively impacting automobile dealers and the credit industry at large,” said WANADA counsel Allen Jones. Jones, along with dealer lawyer Mike Charapp, collaborated on an amicus curiae brief to the Supreme Court supporting the dealerês position which was jointly filed by WANADA., MNCTDA and VADA.

Justice Ruth Bader Ginsburg, author of the court’s opinion, said from the bench that “less-than-meticulous drafting” of an amendment to the law caused confusion, according to a published report. Ginsburg wrote in her opinion that had the court interpreted the statute to allow for larger damages, it would lead to an absurd result because it would cap damages at $2,000 for larger credit deals such as mortgages, but allow unlimited damages for car loans. “There is scant indication Congress ever intended such meaning,” she wrote.