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JUDGE RULES FOR CALIFORNIA NEW CAR DEALERS ASSOCIATION; CASE AGAINST TRUECAR MOVES FORWARD
SACRAMENTO, CA –Los Angeles Superior Court Judge Nancy Newman has ruled that the California New Car Dealers Association’s (CNCDA’s) complaint against TrueCar (NASDAQ: TRUE) properly states a legal claim for violation of the California Unfair Competition Law, perhaps better known as California Business & Professions Code Section 17200. The original lawsuit was filed in May of 2015.
CNCDA has alleged all along that TrueCar violates the California Vehicle Code (CVC) because TrueCar functions as a dealer and as an auto broker without having the required licenses under the CVC, and without complying with other requirements for auto brokers under the CVC, such as disclosing the amount of TrueCar’s fee to the dealer’s customer – and the judge agreed.
The Court also overruled TrueCar’s challenges to CNCDA’s claims seeking an injunction and a Court-issued declaration against TrueCar’s alleged legal violations of these and other CVC requirements, including TrueCar’s advertising and particularly its claims to consumers of “never overpay” and offering the “guaranteed lowest price.”
Now that the Court has rejected TrueCar’s procedural challenges to scrutiny of its conduct, CNCDA can proceed to present the merits of its case.
TrueCar’s former Chairman and CEO Scott Painter said that TrueCar’s competitors are the dealers who do not participate in the TrueCar network. TrueCar’s Executive Vice President and Chief Risk Officer Johnny Stephenson told a group of hedge funds and corporate investors that if the Court requires it, TrueCar will obtain a broker’s license. Both of these statements from Messrs. Painter and Stephenson are quoted in CNCDA’s lawsuit.
“We are gratified by the Court’s careful ruling and look forward to the opportunity to prove our claims on the merits,” said CNCDA President Brian Maas. “Up until now, TrueCar has refused to produce even one document or email, nor has it made available any witnesses for testimony on TrueCar’s practices. With the Court’s explicit overruling of TrueCar’s procedural challenges, we look forward to receiving appropriate evidence and testimony from TrueCar’s representatives, past and present, that bear upon the CNCDA’s claims and proving them to the satisfaction of the Court,” said Maas.
Judge Newman gave TrueCar 30 days to answer CNCDA’s complaint and set a case management conference for June 30, 2016.
The California New Car Dealers Association is the country’s largest state association of franchised new car and truck dealers representing nearly 1,200 dealer members. Last year California’s franchised new car dealers sold more than 2.5 million new and used cars and trucks.
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