Legislature(2007 - 2008)BUTROVICH 205

02/12/2008 01:00 PM Senate TRANSPORTATION


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
* SB 164 USED MOTOR VEHICLE SALES
Moved SB 164 Out of Committee
* SB 249 CAPSTONE AVIONICS FUND/LOANS
Moved SB 249 Out of Committee
Bills Previously Heard/Scheduled
                SB 164-USED MOTOR VEHICLE SALES                                                                             
                                                                                                                              
CHAIR KOOKESH announced consideration of SB 164.                                                                                
                                                                                                                                
1:08:29M                                                                                                                      
TREVOR FULTON, staff to Senator  McGuire, sponsor of SB 164, said                                                               
SB 164  rights a  wrong in Alaska  statutes removing  language in                                                               
subsection (c)  that governs  used motor  vehicle sales.  He said                                                               
the  language  was obsolete  and  no  longer  of any  benefit  to                                                               
dealers, consumers or the state,  because it required a notice on                                                               
all used  vehicles for sale  that it  is not subject  to Alaska's                                                               
lemon laws, is  not covered under a  manufacturer's warranty, and                                                               
is  not  manufactured  for  sale in  Canada  or  another  foreign                                                               
country.                                                                                                                        
                                                                                                                                
All  three  of  these  conditions are  unnecessary  or  redundant                                                               
because  Alaska's lemon  laws  apply only  to  new vehicles,  the                                                               
Federal  Trade Commission  already requires  dealers to  disclose                                                               
that the vehicle  is not covered under  a manufacturer's warranty                                                               
and  AS  45.25.470  already mandates  that  dealers  disclose  in                                                               
writing whether  a motor vehicle was  originally manufactured for                                                               
sale in Canada or another country.                                                                                              
                                                                                                                                
1:11:58 PM                                                                                                                    
SENATOR COWDERY asked if the  warranty follows the vehicle or the                                                               
owner.                                                                                                                          
                                                                                                                                
MR. FULTON  replied that this  bill doesn't  specifically address                                                               
that but  someone from the Alaska  Automobile Owner's Association                                                               
could probably address that.                                                                                                    
                                                                                                                                
SENATOR  COWDERY asked  why  it  is necessary  to  have the  bill                                                               
retroactive.                                                                                                                    
                                                                                                                                
MR. FULTON  replied that class-action lawsuits  are being brought                                                               
against car dealerships  in the State of Alaska  for unfair trade                                                               
practices because for  a couple of years  they weren't stickering                                                               
their used  vehicles; making it  retroactive would  address those                                                               
lawsuits.                                                                                                                       
                                                                                                                                
CHAIR  KOOKESH asked  Mr. Sniffen  to  address the  retroactivity                                                               
clause and how it relates to the present lawsuits.                                                                              
                                                                                                                                
ED SNIFFEN,  Assistant Attorney General, Department  of Law, said                                                               
the retroactivity  provision was  requested by the  auto dealers.                                                               
He  said  there  is  some  question whether  the  bill  could  be                                                               
retroactively applied to halt pending  litigation. He didn't know                                                               
what  the  result of  that  will  be,  but  this bill  would  not                                                               
interfere  with those  lawsuits  if it  was  determined that  the                                                               
retroactive provision couldn't stop the litigation.                                                                             
                                                                                                                                
Fundamentally,   the   reason   the  dealers   are   asking   for                                                               
retroactivity is  because when  this law was  passed in  2004, it                                                               
tried to  address a problem  with "current model  used vehicles."                                                               
This is  a used  vehicle, but  one that is  still was  within the                                                               
current model  year of  vehicles being  produced and  offered for                                                               
sale  by a  manufacturer.  He  offered an  example  where a  Fort                                                               
Richardson soldier  buys a new  Chevy 1500 pickup truck  and gets                                                               
deployed  to Iraq  three  months  later and  tries  to bring  the                                                               
vehicle back to the dealer for  sale or trade. That vehicle would                                                               
be considered a current model  vehicle because it is still within                                                               
the current model year even though  it already had one owner. Not                                                               
only  were  some dealers  selling  them  with very  low  mileage,                                                               
others  were buying  them  in  Canada to  take  advantage of  the                                                               
exchange  rate and  selling them  in Alaska  with sometimes  less                                                               
than 20 miles. So they had the appearance of a new vehicle.                                                                     
                                                                                                                                
To  address   that,  additional   disclosure  were   required  so                                                               
consumers  would  understand  clearly   these  very  low  mileage                                                               
vehicles  were  not  new  and  they wouldn't  have  some  of  the                                                               
protections they  would have if  they were. When the  law passed,                                                               
for some reason,  the disclosure requirement was  extended to all                                                               
used vehicles not  just the current model  low-mileage ones. That                                                               
wasn't the intent and dealers  did not sticker all used vehicles.                                                               
The retroactivity language was requested  to make it clear it was                                                               
never the  intent that  these disclosures be  posted on  all used                                                               
cars, but rather just on current model used vehicles.                                                                           
                                                                                                                                
1:17:02 PM                                                                                                                    
CHAIR KOOKESH said he wanted to  make sure that was on the record                                                               
because the  committee does  not want  to interfere  with current                                                               
lawsuits.                                                                                                                       
                                                                                                                                
SENATOR OLSON questioned what will  happen to the plaintiffs with                                                               
class action lawsuits.                                                                                                          
                                                                                                                                
MR. SNIFFEN replied it's hard to  say. He said some dealers might                                                               
see what  kind of  mileage they  can get  out of  the retroactive                                                               
provision. The  law is very  gray in this area  regarding whether                                                               
the  lawsuits  will  be  dropped  or  limited  to  current  model                                                               
vehicles. This  will need to  be an argument  between plaintiffs'                                                               
lawyers and the defendant dealers.                                                                                              
                                                                                                                                
SENATOR OLSON asked  if something could be added to  this bill to                                                               
avoid more litigation.                                                                                                          
                                                                                                                                
MR.  SNIFFEN  replied  that   current  language  will  discourage                                                               
lawsuits and he didn't know what  else could be done. It is clear                                                               
that legislators  intend the  law to  apply retroactively  to the                                                               
extent that it can be, to  protect dealers who in good faith were                                                               
trying to comply with the law at the time.                                                                                      
                                                                                                                                
1:18:58 PM                                                                                                                    
SENATOR OLSON asked what kind  of consumer protection buyers will                                                               
have under this  bill, since grievous action by  used car dealers                                                               
is commonly known.                                                                                                              
                                                                                                                                
MR.  SNIFFEN   answered  that  currently   a  host   of  consumer                                                               
protections  under   the  Automobile  Dealers  Act   in  AS.45.25                                                               
includes    disclosures   to    consumers   regarding    vehicles                                                               
manufactured  in  another  country  so they  can  decide  if  the                                                               
warranty will follow  the vehicle. Alaska also  requires used car                                                               
dealers to  obtain information about  a vehicle's  prior accident                                                               
or repair history for prospective purchasers.                                                                                   
                                                                                                                                
In 2002 he along with legislators  and industry came up with some                                                               
good consumer  protection legislation against offensive  used car                                                               
practices.  The  Federal  Trade Commission  (FTC)  also  requires                                                               
disclosures   already  on   used  vehicles   concerning  warranty                                                               
limitations  and other  rights a  consumer may  have. He  said he                                                               
thinks sufficient protections are  in place that don't overburden                                                               
dealers,   but  still   provide  good   protection  for   Alaskan                                                               
consumers.                                                                                                                      
                                                                                                                                
1:20:59 PM                                                                                                                    
MR. FULTON said the bill packet  includes an "as is sticker" that                                                               
explicitly  states what  is  or is  not  covered under  warranty.                                                               
Alaska Statute 45.25.470  on sales of vehicles  manufactured in a                                                               
foreign country says  that before a sale, a  motor vehicle dealer                                                               
shall disclose in writing whether  a motor vehicle was originally                                                               
manufactured for sale in Canada or another foreign country.                                                                     
                                                                                                                                
SENATOR  COWDERY  asked  how  the  dealer  can  comply  with  the                                                               
retroactive provision if he has already sold the vehicle.                                                                       
                                                                                                                                
1:22:37 PM                                                                                                                    
MR. SNIFFEN responded  that if the vehicle has  been sold without                                                               
the  disclosure, the  violation  has already  occurred or  hasn't                                                               
occurred  if this  bill includes  the retroactive  provision, and                                                               
there's  nothing  the dealer  can  do.  Potentially some  of  the                                                               
vehicle  sales could  be identified  if the  purchasers could  be                                                               
located.                                                                                                                        
                                                                                                                                
SENATOR COWDERY asked  if owners can't be located  means no other                                                               
options are available.                                                                                                          
                                                                                                                                
MR. SNIFFEN  replied that is correct.  He said that is  a problem                                                               
with  the large  transient population  in Alaska  especially with                                                               
military bases.                                                                                                                 
                                                                                                                                
1:24:02 PM                                                                                                                    
JON COOK,  Legislative Director, Alaska Auto  Dealers Association                                                               
(AADA), Anchorage,  AK, said he  supported SB  164.  He  said his                                                               
association  has been  working with  Mr. Sniffen  trying to  deal                                                               
with the  unintended consequences of the  earlier legislation and                                                               
the only  party to  benefit from  this provision  is class-action                                                               
attorneys.  Most dealerships  in  Alaska  are small  family-owned                                                               
operations and  litigation could  put them  out of  business. The                                                               
lemon law, the  manufacturer's warranty, and where  a vehicle was                                                               
manufactured are already covered  under existing statute or don't                                                               
apply. He said  the two sides, industry and  the department, have                                                               
come together in agreement to create balanced legislation.                                                                      
                                                                                                                                
1:27:15 PM                                                                                                                    
HEIDI ANDERSON,  owner of Quality  Auto Sales, supported  SB 164.                                                               
She confirmed  that the sticker  is redundant and  was originally                                                               
designed for Canadian cars brought  into the market. The language                                                               
of  AS  45.25.465,  subsection  (c)  repeats  what  is  addressed                                                               
elsewhere or  does not even  deal with  the used car  market. She                                                               
said  the deleted  language doesn't  benefit anyone  and is  only                                                               
being used to generate lawsuits against dealers.                                                                                
                                                                                                                                
1:29:19 PM                                                                                                                    
SENATOR OLSON asked if anyone opposes this bill.                                                                                
                                                                                                                                
MR. FULTON replied there has been no opposition.                                                                                
                                                                                                                                
CHAIR KOOKESH  set SB  164 aside  until Senator  Wielechowski and                                                               
Senator Wilken could join the committee.                                                                                        
                                                                                                                                
                SB 164-USED MOTOR VEHICLE SALES                                                                             
                                                                                                                                
1:54:33 PM                                                                                                                    
CHAIR KOOKESH reconvened the meeting  and announced the committee                                                               
would again take  up SB 164. Public testimony had  been taken and                                                               
there  was no  opposition.  He thanked  Senator Wielechowski  and                                                               
Senator  Wilken   for  leaving   another  meeting  to   join  the                                                               
committee.                                                                                                                      
                                                                                                                                
1:55:35 PM                                                                                                                    
SENATOR  OLSON  moved  to  report  SB  164  from  committee  with                                                               
individual  recommendations and  attached  fiscal note(s).  There                                                               
being no objection, the motion carried.                                                                                         
                                                                                                                                

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