'Hangtag' class action suit gets new trial

Publish Date: 
Mar 29, 2012
By Holly J. Wagner

A CALIFORNIA DEALER again faces a class action lawsuit for allegedly failing to place hangtags on vehicles sold in his store and to disclose additional dealer charges on those hangtags.

An appellate court has ordered a new trial for a six-year-old case charging Honda North Hollywood with deceptive sales practices.

Audrey Medrazo filed the suit in 2006 under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA). In 2005 Medrazo alleges that she purchased a motorcycle which did not have a tag disclosing dealer destination and assembly charges or charges for dealer-added accessories, as required under the California Vehicle Code. The case does not challenge the validity of dealer prep, assembly or accessory charges, only the alleged failure of Honda North Hollywood to disclose those charges in a timely fashion during the sales process.

Honda North Hollywood opposed certification of the class and, while the trial judge sided with the dealer, the Court of Appeals found for Medrazo and ordered the class certified in 2008. Honda North Hollywood again appealed, but the state Supreme Court declined to review the decision, letting the appellate decision stand. The class was defined as “All purchasers of new motorcycles who were charged for ‘destination,’ ‘assembly,’ or other dealer-added ‘accessories’ that were not disclosed on a hanger tag since Aug. 1, 2002, being four years prior to the filing of this lawsuit.” Plaintiffs’ attorney William Kreig says this amounts to 4,100 units and $4 million to $5 million in restitution if the class wins.

The attorney representing Honda North Hollywood, Richard Buckley, had not returned Dealernews' calls seeking comment by press time.

The dealership sought to have Medrazo’s UCL claims dismissed because the dealer charges were disclosed before Medrazo signed the sales contract. It then fought the CLRA claims on the grounds that Medrazo had failed to show she or others had been harmed by the lack of tags, that she failed to present evidence to show that the dealer engaged in prohibited practices, or she failed establish the amount of dealer-added charges paid or restitution that she or other members of the class should receive. The court ruled in the dealer’s favor; however, Medrazo’s attorneys appealed that decision. They argued before the Second District appellate court March 16, and the court issued a ruling March 27, calling for a new trial.

In the underlying case, attorneys for Honda North Hollywood asked Los Angeles Superior Court Judge John Shook to find in their favor after he heard the Medrazo’s side of the case. He agreed, so they did not put on a defense. Medrazo’s attorneys appealed that decision, and won.

While the trial court had dismissed claims under both statutes, the appellate court ruled that while Medrazo had abandoned the CLRA claims, the UCL claims should stand, and sent the case back to L.A. Superior Court to be assigned for a new trial.

Trial hangs on hangtags. Medrazo testified that she did not see hang tags on any of the motorcycles in the showroom when she bought her boyfriend a motorcycle in September 2005, although some vehicles had price stickers on them. Medrazo admitted she did not know what a hangtag was at the time she bought the bike.