odometer

Odometer Fraud Victims Suffer Major Setback

David J. Diersen v. Chicago Car Exchange, Inc., 110 F.3d 481 (7th Cir. 1997), cert. denied, 118 S.Ct. 178 (1997) is a lawsuit that involved the Federal Odometer Act (FOA), the Department of Transportation’s (DOT) authority to grant exemptions from the FOA, and the sufficiency of material facts that would make a dealer suspicious of a car’s mileage. On December 21, 1995, Judge Suzanne B. Conlon, United States District Court for the Northern District of Illinois, Eastern Division, granted the Chicago Car Exchange summary judgment on the assumption that the exemption that the DOT had granted sellers of old cars was valid. Diersen appealed that decision to the United States Court of Appeals for the Seventh Circuit (Illinois, Indiana, and Wisconsin). On September 16, 1996, Diersen presented oral arguments to Chief Judge Posner and Circuit Court Judges Coffey and Kanne. On March 31, 1997, the Appellate Court ruled that DOT’s exemption for old cars was invalid, but the Appellate Court nevertheless affirmed the District Court’s summary judgment on other grounds. The Appellate Court decision is available at www.kentlaw.edu/7circuit/1997/mar/96-1588.html. On May 13, 1997, the Appellate Court denied Diersen’s motion for rehearing. On August 5, 1997, Diersen filed a petition for writ of certiorari with the Supreme Court of the United States. On October 6, 1997, the Supreme Court denied Diersen’s petition.

The Appellate Court accepted Diersen’s argument that DOT’s old car exemption was invalid because DOT did not have authority to grant such exemptions. However, Diersen understands that subsequently, a) Congress and the Clinton Administration acquiesced to the wishes of the automobile and truck manufacturers and dealers and their lobbyists, amended the FOA, and gave DOT the exemption authority it lacked and b) DOT reissued all the exemptions that it had previously granted including exemptions for sellers of old cars and heavy trucks and for manufactures of cars and trucks.

The following is Diersen’s discussion of the extremely unfortunate impact of the litigation on car buyers. His discussion is followed by his Supreme Court petition.

According to the National Consumer Law Center, odometer fraud has been endemic since the first cars were manufactured. An astonishing percentage of new and used car sales involve fraud, deception, or other unfair conduct. In 1988, the National Highway Transportation Safety Administration (NHTSA) estimated that odometer fraud was costing consumers about four billion dollars a year. A used car sale offers the same potential for abuse as a new car, plus the added fact that the buyers know less about what they are buying. The older a car is, the more likely its history, including its mileage and number of prior owners, will be misrepresented.

Congress passed the FOA because state odometer fraud laws had proven to be ineffectual. The FOA was supposed to make it easier for odometer fraud victims to seek justice. The goal was to end the notion of “buyer beware” so that car buyers could rely on a car’s odometer reading as an index of its value, safety, and reliability. According to cases decided under the FOA, buyers do not have to prove that the dealer knew that the odometer certification was false. However, the buyer still has the difficult task of proving that the dealer intended to defraud. Intent to defraud can be proven if:

— sufficient facts existed to make the dealer suspicious of the odometer reading;

— the dealer nevertheless failed to investigate the car’s mileage history; and

— a discrepancy exists in the car’s mileage history that could have been detected by a reasonable investigation, for example, by obtaining copies of the car’s prior titles.

Dealers, their lawyers, and their lobbyists have always derided the FOA because it placed a responsibility on dealers that they do not want – the responsibility to detect odometer discrepancies. Dealers who believe in “buyer beware” want to be able to close their eyes and ignore facts that would make them suspicious. Some dealers want to continue to be free to make the greater profits possible from successfully passing odometer fraud along.

Sadly, the FOA, and therefore, car buyers, suffered a major setback. The United States Supreme Court recently upheld a federal Appellate Court decision that determined what facts should make a dealer suspicious of a car’s odometer reading. The decision in Diersen v. Chicago Car Exchange, 110 F.3d 481 (7th Cir. 1997), cert. denied, 118 S.Ct. 178 (1997) was basically that no set of facts could possibly make any dealer suspicious. If one reads the Appellate Court decision (available at www.kentlaw.edu/7circuit/1997/mar/96-1588.html ) and Diersen’s petition for writ of certiorari (see below), it is clear that the Appellate Court and the Supreme Court found that the following facts, taken either individually or as a whole, were not sufficient to make the dealer suspicious:

— the car’s odometer reading was extremely low (under 23,000 miles) in relation to its age (26 years);

— the car’s driver seat was worn;

— extensive mechanical, rust, and body restoration work had been done to the car;

— no maintenance or repair receipts existed to support the mileage claim;

— the dealer obtained the car for only half its wholesale value;

— the dealer had no prior business dealings with the individual it purchased the car from;

— none of the car’s tires or its spare were original;

— the speedometer clicked and made grinding noises;

— the tachometer significantly overstated engine speed;

— many trim parts had been pitted and re-chromed; and

— the car’s oil pan was damaged.

If the above facts were not sufficient to make the dealer suspicious, than no set of facts would make any dealer suspicious. In addition, according to the decision, dealers can further escape liability under the FOA if they swear under oath that they relied on the mileage certification they received when they bought the car, if they swear under oath that their physical inspection of the car gave them no reason to be suspicious of its odometer reading, if they swear under oath that they had offered to take the car back and refund the purchase price, and if they get the car’s prior owners to swear under oath that the odometer discrepancy was a clerical error and not a fraud that they had passed along.

The Seventh Amendment guarantees everyone the right to a jury trial if the amount in dispute exceeds $20. However, in this lawsuit, like it happens in most lawsuits in which a consumer sues a business, the District Court, the Appellate Court, and the Supreme Court denied Diersen any kind of trial. Courts are supposed to view disputed facts in a light most favorable to the plaintiff when they decide the defendant’s inevitable motion to dismiss or motion for summary judgment. However, the Courts did not do that in Diersen. While the Appellate Court acknowledged in its decision that the dealer knew that the car’s odometer reading was extremely low in relation to its age, the Appellate Court failed to acknowledge that the dealer also knew of the other nine facts listed above. Even though Diersen brought that to the Appellate Court’s attention in a motion for a rehearing, the Appellate Court refused to do anything. Similarly, the Supreme Court refused to do anything when it denied Diersen’s petition for writ of certiorari.

Why were the Courts so eager to make it look like the dealer had no reason to be suspicious? Why were the Courts so eager to unquestioningly accept the unsupported disputed self-serving incredulous statements made under oath by the car’s prior owners, the dealer, and the dealer’s attorney? Why did the Courts rule way they did?

The leading reason seems to be the tremendous influence that the dealers’ lobbyists have. The Appellate Court’s decision reads like it was written by attorneys for the National Automobile Dealers Association as it pertains to material facts that would make a dealer suspicious of an odometer reading. Another reason is probably Chief Justice Rehnquist’s well-known position that the FOA should be abolished. He and many other federal judges believe that they are overworked and the federal courts are overloaded primarily because too many state laws, like state odometer fraud laws, have been “federalized.”

Other possible reasons include that no consumer group, car club, car magazine, etc. responded to Diersen’s requests that they file legal documents in support of his arguments; that the dealer involved advertises heavily, claims Jay Leno as one of its customers, and is represented by a very aggressive attorney who filed a $10,000 (although unsuccessful) motion for sanctions against Diersen; that Diersen’s attorney, who is a leading consumer advocate, withdrew because the car’s many prior owners stuck to their story that they did not pass the fraud along; that Diersen thereafter represented himself and complained about his former attorney as well as the dealer’s attorney; that Diersen is not an attorney himself; etc.

If you buy a car from a dealer and subsequently discover an odometer discrepancy that the dealer should have detected, attorneys who read the Appellate Court decision in Diersen and his petition for writ of certiorari will tell you that because of the precedent established by Diersen, you might as well give up because you have no real recourse against the dealer. Sadly, as we all know, because society stigmatizes complainers and victims and because seeking justice is extremely stressful and costly, most victims of odometer fraud simply pass the fraud along.

As long as the dealer lobbyists continue to have their tremendous influence and Chief Justice Rehnquist’s position prevails that judges are overworked and courts are overloaded primarily because too many laws have been federalized, the FOA will be just as ineffectual as the state odometer fraud laws and victims of odometer fraud will have no real recourse. Do no be surprised if lobbyists succeed in getting DOT to grant dealers and manufacturers even more exemptions from the FOA.

The bottom line is this – unless you believe mileage has no major impact on a car’s value, safety, or reliability; unless you do not mind being a victim of odometer fraud; or unless you are one of those “buyer beware” types that has no problem with passing the fraud along — do not buy a used car unless you first obtain overwhelming evidence that the claimed mileage is accurate. At a minimum, obtain and scrutinize copies of all the car’s prior titles before you make an offer to buy the car.

Diersen would greatly appreciate any comments or suggestions that you may have concerning the odometer fraud, the lawsuit, and related issues. He can be reached at 630-653-0462. His fax is 630-653-9665. His e-mail address is [email protected] . His web site is www.diersen.com .

No: 97-224

___________________________________________________________________

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1996

___________________________________________________________________

DAVID JOHN DIERSEN,

Petitioner,

v.

CHICAGO CAR EXCHANGE, INC.,

Respondent.

___________________________________________________________________

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Seventh Circuit

___________________________________________________________________

PETITION FOR WRIT OF CERTIORARI

___________________________________________________________________

Dave Diersen, Pro Se

915 Cove Court

Wheaton, Illinois 60187

(630) 653-0462

QUESTIONS PRESENTED

According to cases decided under the Federal Odometer Act (the Act), there was intent to defraud if a dealer certified a car’s mileage without investigating its mileage history when there were sufficient material facts to make the dealer suspicious of the mileage claim. In this case, the respondent, a collector car dealer, certified that a car had been driven only 22,633 miles without investigating its mileage history even though the car was 26 years old, it had a worn driver’s seat, it had been extensively restored, no maintenance or repair receipts existed to support the mileage claim, etc. A minimal mileage investigation would have disclosed that it had been driven at least 75,000 miles according to prior title documents. Relying on a 1988 Department of Transportation (DOT) regulation that exempted cars over 10 years old from the Act, the District Court granted the respondent summary judgment even though the petitioner’s discovery had not been completed.

On appeal, the Seventh Circuit invalidated DOT’s old car exemption because the Act does not include any exemptions and the Act has not been amended to give DOT authority to grant any exemptions. However, the Seventh Circuit granted the respondent summary judgment on other grounds concluding that a jury would find that the respondent was not more than merely negligent when it failed to investigate the car’s mileage history. It did this without acknowledging or addressing the bulk of the material facts that favored the petitioner’s argument that the respondent should have been suspicious and notwithstanding the District Court Magistrate Judge’s subsequent statements and conclusions favoring the petitioner. Finally, on May 28, 1997, relying on a section in its 1997 appropriations act, DOT rejected the Seventh Circuit’s invalidation of the old car exemption. The five questions presented here are:

1. Whether the Seventh Circuit’s decision concerning the intent to defraud issue conflicts with other decisions, conflicts with the intent of the Act, hinders enforcement of the Act, or harms odometer fraud victims’ rights under the Act.

2. Whether the Seventh Circuit misapplied the Seventh Amendment to the United States Constitution or the Federal Rules of Civil Procedure concerning the right to a jury trial.

3. Whether the Seventh Circuit’s affirmation of summary judgment on other grounds departed from the accepted and usual course of judicial proceedings.

4. Whether the Seventh Circuit made erroneous factual findings and credibility determinations to develop the record concerning the intent to defraud issue.

5. Whether it was improper for DOT to reject the Seventh Circuit’s finding that the old car exemption is invalid.

TABLE OF CONTENTS

QUESTIONS PRESENTED

JUDGMENT AND OPINION BELOW

JURISDICTION

CONSTITUTIONAL PROVISIONS AND STATUTES

STATEMENT OF THE CASE

REASONS FOR GRANTING THE WRIT

I. THE SEVENTH CIRCUIT DECISION CONCERNING THE INTENT TO DEFRAUD ISSUE CREATES AN INTOLERABLE CONFLICT WITH OTHER DECISIONS, IT DIRECTLY CONFLICTS WITH THE INTENT OF THE ACT, IT SEVERELY HINDERS ENFORCEMENT OF THE ACT, AND IT SEVERELY HARMS ODOMETER FRAUD VICTIMS’ RIGHTS UNDER THE ACT

II. THE SEVENTH CIRCUIT MISAPPLIED THE SEVENTH AMENDMENT TO THE UNITED STATES CONSTITUTION AND THE FEDERAL RULES OF CIVIL PROCEDURE CONCERNING THE RIGHT TO A JURY TRIAL

III. THE SEVENTH CIRCUIT’S AFFIRMATION OF SUMMARY JUDGMENT ON OTHER GROUNDS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS

IV. THE SEVENTH CIRCUIT MADE ERRONEOUS FACTUAL FINDINGS AND CREDIBILITY DETERMINATIONS TO DEVELOP THE RECORD CONCERNING THE INTENT TO DEFRAUD ISSUE

V. BECAUSE ACT DOES NOT INCLUDE ANY EXEMPTIONS AND THE ACT HAS NOT BEEN AMENDED TO GIVE DOT AUTHORITY TO GRANT ANY EXEMPTIONS, IT WAS IMPROPER FOR DOT TO REJECT THE SEVENTH CIRCUIT’S FINDING THAT THE OLD CAR EXEMPTION IS INVALID

CONCLUSION

APPENDIX (omitted)

TABLE OF AUTHORITIES

Cases

Adams v. Neil Huffman Nissan, Inc., 1989 Ky.App. LEXIS 51 (1989)

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)

Auto Sport Motors, Inc. v. Bruno Auto Dealers, Inc. and Brielle Motors, Inc., 721 F.Supp. 63 (S.D.N.Y. 1989)

Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358 (3d Cir. 1992), cert. denied, 507 U.S. 912, 122 L.Ed. 2d 659, 133 S.Ct. 1262 (1993)

Carpenter v. Chrysler Corp., 853 S.W.2d 346 (Mo.Ct.App. 1993)

Donovan v. City of Milwaukee, 17 F.3d 944 (7th Cir. 1994)

Halpin v. W.W. Grainger, Inc., 962 F.2d 685 (7th Cir. 1992)

Haynes v. Manning, 917 F.2d 450 (10th Cir. 1990)

Heffler v. Joe Bells Auto and John Kennedy Ford, 946 F. Supp. 348, LEXIS 16061 (Penn. 1996)

Johnson v. Runyon, et. al., 47 F.3d 911 (7th Cir. 1995)

Jones v. Fenton Ford, Inc., 427 F.Supp. 1328 (D. Conn. 1977)

Jones v. Hanley Dawson Cadillac, 848 F.2d 803 (7th Cir. 1988)

Landrum v. Goddard, 921 F.2d 61 (5th Cir. 1991)

Levine v. Parks Chevrolet, Inc., 76 N.C.App. 44, 331 S.E.2d 747 (1985)

Maugh v. Chrysler Corporation, 818 S.W.2d 658 (Mo.App. 1991)

Nieto v. Pence, 578 F.2d 640 (5th Cir. 1978)

Odom v. Roberts, 606 So. 2d 114 (Miss. 1992)

Oettinger v. Lakeview Motors, Inc., 675 F.Supp. 1488 (E.D.Va. 1988)

Orca Bay Seafoods v. Northwest Truck Sales, Inc., 32 F.3d 433 (9th Cir. 1994)

Pernell v. Southall Realty, 416 U.S. 363 (1974)

Ragland v. Dumm, 1994 Ohio App. LEXIS 6030 (1994)

S&S Toyota, Inc. v. Kirby, 649 So. 2d 916 (Fla. Dist. Ct. App. 1995)

Smith v. Walt Bennett Ford, Inc., 864 S.W.2d 817 (Ark. 1993)

Trap Rock Industries, Inc. v. Local 825, 982 F.2d 884 (3rd Cir. 1992)

Constitutional Provisions and Statutes

Seventh Amendment to the United States Constitution

Federal Rules of Civil Procedure, Rule 12(c)

Federal Rules of Civil Procedure, Rule 38(a)

Federal Rules of Civil Procedure, Rule 56(c)

Vehicle Information and Cost Savings Act (“the Federal Odometer Act” or “the Act”), Title 49 U.S.C. CHAPTER 327

Section 32701. Findings and purposes

Section 32705. Disclosure requirements on transfer of motor vehicles

Section 32710. Civil actions by private persons

49 C.F.R. Section 580.6(a)(1) “heavy truck exemption”

49 C.F.R. Section 580.6(a)(3) “old car exemption”

49 C.F.R. Section 580.6(b) “new car exemption”

1997 DOT Related Agencies Appropriations Act, Public Law 104-205 (Sept. 30, 1996), Section 332

Other Authorities

May 28, 1997, NHTSA Letter to the American Association of Motor Vehicle Administrators

PETITION FOR WRIT OF CERTIORARI

Petitioner David J. Diersen (“Diersen”) respectfully asks that this Court issue a writ of certiorari to review the decision the Seventh Circuit entered in this proceeding on March 31, 1997. While Diersen is not an attorney, he has been a certified public accountant in Illinois since 1979, a licensed CPA in Illinois since 1982, and a Certified Fraud Examiner since 1990. Diersen is Pro Se in this matter because of the extremely high cost of attorney fees and because the District Court allowed his former attorney to withdraw. However, if this Court grants Diersen a writ, Diersen will retain an attorney admitted to practice before this Court to represent him.

JUDGMENT AND OPINION BELOW

The decision of the Seventh Circuit that gives rise to this petition is in Appendix A at page A-1. The May 13, 1997 Order of the Seventh Circuit denying Diersen’s April 14, 1997 Petition for Rehearing is Appendix B at page A-18.

JURISDICTION

The basis for this Court’s jurisdiction is the Seventh Circuit’s March 31, 1997 decision and its May 13, 1997 Order denying Diersen’s April 14, 1997 Petition for Rehearing. This Court’s jurisdiction is invoked pursuant to 28 U.S.C. Section 1254(1).

CONSTITUTIONAL PROVISIONS AND STATUTES

Seventh Amendment to the United States Constitution: In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.

Federal Rules of Civil Procedure, Rule 12(c) in relevant part: Concerning motions for judgment on the pleadings, “All parties shall be given reasonable opportunities to present all materials made pertinent to such a motion by Rule 56.”

Federal Rules of Civil Procedure, Rule 38(a): Right Preserved. The right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by statute of the United States shall be preserved to the parties inviolate.

Federal Rules of Civil Procedure, Rule 56(c) in relevant part: Summary judgment is appropriate only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.”

Vehicle Information and Cost Savings Act (“the Federal Odometer Act” or “the Act”), Title 49 U.S.C. CHAPTER 327 (formerly 15 U.S.C. Section 1981 et seq.).

Section 32701. Findings and purposes

(a) FINDINGS.–Congress finds that–

(1) buyers of motor vehicles rely heavily on the odometer reading as an index of the condition and value of a vehicle;

(2) buyers are entitled to rely on the odometer reading as an accurate indication of the mileage of the vehicle;

(3) an accurate indication of the mileage assists a buyer in deciding on the safety and reliability of the vehicle; and

(4) motor vehicles move in, or affect, interstate and foreign commerce.

(b) PURPOSES.–The purposes of this chapter are–

(1) to prohibit tampering with motor vehicle odometers; and

(2) to provide safeguards to protect purchasers in the sale of motor vehicles with altered or reset odometers.

Section 32705, Disclosure requirements on transfer of motor vehicles, in relevant part:

(a) WRITTEN DISCLOSURE REQUIREMENTS.–

(1) Under regulations prescribed by the Secretary of Transportation, a person transferring ownership of a motor vehicle shall give the transferee a written disclosure–

(A) of the cumulative mileage registered by the odometer; or

(B) that the mileage is unknown if the transferor knows that the mileage registered by the odometer is incorrect.

(2) A person making a written disclosure required by a regulation prescribed under paragraph (1) of this subsection may not make a false statement in the disclosure.

***

(4) The regulations prescribed by the Secretary shall provide the way in which information is disclosed and retained under this section.

Section 32710, Civil actions by private persons:

(a) VIOLATION AND AMOUNT OF DAMAGES.–A person that violates this chapter or regulation prescribed or order issued under this chapter, with intent to defraud, is liable for 3 times the actual damages or $1,500, whichever is greater.

(b) CIVIL ACTIONS.–A person may bring a civil action to enforce a claim under this section in an appropriate United States district court or in another court of competent jurisdiction. The action must not be brought not later that 2 years after the claim accrues. The court shall award costs and a reasonable attorney’s fee to the person when a judgment is entered for that person.

Odometer Disclosure Requirements, 49 C.F.R. Section 580.6, Exemptions, in relevant part:

(a) A transferor or lessee of any of the following motor vehicles need not disclose the vehicle’s odometer mileage:

(1) A vehicle having a Gross Vehicle Weight Rating, as defined in Section 571.3 of this title, of more than 16,000 pounds;

***

(3) A vehicle that is ten years old or older; or

***

(b) A transferor of a new vehicle prior to its first transfer for purposes other than resale need not disclose the vehicle’s odometer mileage.

1997 DOT Related Agencies Appropriations Act, Public Law 104-205 (Sept. 30, 1996), Section 332: “Notwithstanding any other provisions of law, the Secretary may use funds appropriated under this Act, or any other subsequent Act, to administer and implement the exemption provisions of 49 CFR 580.6 and to adopt or amend exemptions from the disclosure requirements of any class or category of vehicles that the Secretary deems appropriate.”

STATEMENT OF CASE

According to cases decided under the Federal Odometer Act (the Act), there was intent to defraud if a dealer certified a car’s mileage without investigating its mileage history when there were sufficient material facts to make the dealer suspicious of the mileage claim.

In July 1994, the respondent, the Chicago Car Exchange, Inc. (CCE), a large profitable car dealer that has specialized in selling expensive classic, antique, and collector cars since 1989, certified in writing to Diersen that a 1968 Dodge Charger R/T had been driven only 22,633 miles without investigating its mileage history. Relying on CCE’s mileage certification and CCE’s claim that the car had only two owners prior to CCE, Diersen paid CCE $16,790 for the car plus sales tax and title and license fees. CCE certified the car’s extremely low mileage without investigating its mileage history even though it was 26 years old; it had a worn driver’s seat; CCE knew that extensive mechanical, rust, and body restoration work had been done; CCE had not received any documentation to support the claimed mileage other than the car’s title; CCE obtained the car for only about half its wholesale value; CCE had no prior business dealings with the individual it purchased the car from; none of the car’s tires or its spare were original; the speedometer clicked and made grinding noises; the tachometer significantly overstated engine speed; many trim parts had been severely pitted and re-chromed; and its oil pan was dented.

During August and September 1994, Diersen spent $2,600 on the car in improvements and repairs. In October 1994, Diersen learned from titles and title applications provided by the Illinois Secretary of State that the car had at least four owners prior to CCE and it had been driven at least 75,000 miles as of 1983. Diersen spoke to the prior owners who claimed that the 22,600 mileage figure was correct and that the 75,000 mileage figure shown on two titles and three title applications were “clerical errors.” But none of the prior owners provided Diersen any documentation to support their low mileage claims. The car’s second and third titles showed 75,000 miles. However, the car’s third and fourth owners of record had certified that the car had been driven only 22,000 miles as of July 12, 1985 and without questioning the mileage discrepancy, the Illinois Secretary of State simply issued the fourth title showing 22,000 miles.

Diersen had the car professionally appraised and learned that it was worth $7,000 less because of the mileage discrepancy. Through an attorney, Diersen asked CCE to either pay him the $7,000 loss in the car’s value or agree in writing to buy the car back for what it would be worth if no mileage discrepancy existed. While CCE indicated that it would take return of the car and refund Diersen what he had paid CCE, CCE refused to put anything in writing and CCE refused to discuss the $2,600 that Diersen had invested in the car.

In April 1995, with full knowledge of the prior owner’s “clerical error” explanation for the mileage discrepancy, attorney Daniel A. Edelman (Edelman), filed suit in District Court under Section 32710 of the Act on a contingency fee basis charging CCE with intentionally providing Diersen with an inaccurate mileage certification in violation of Section 32705 of the Act to induce Diersen to pay CCE more for the car. Edelman would not agree to name as co-defendants any of the car’s prior owners, CCE’s president, or the CCE salesman that Diersen dealt with.

On September 27, 1995, Edelman advised Diersen by phone that he wanted to withdraw because the prior owners continued to maintain their “clerical error” explanation for the mileage discrepancy and they had not provided evidence that the car had been driven more than 22,600 miles. Diersen asked Edelman to reconsider and pointing out to him that the prior owners had not provided any documentation to support their “clerical error” explanation or their low mile claims. In addition, Diersen pointed out that Edelman had not deposed the CCE salesman that Diersen dealt with, the car’s first owner, or the individual who had possession of the car for a substantial period of time between the first and second owners of record. Edelman had not deposed as adverse parties CCE’s president or the car’s second, third, and fourth owners of record. Edelman had not asked CCE if, when it certified the car’s mileage, it knew that it was not required to do so because of the “old car exemption,” the 1988 National Highway Traffic Safety Administration (NHTSA) regulation 49 CFR 580.6(a)(3). Finally, Edelman had not sought facts to prove or infer that CCE knew of the old car exemption. The record shows that on September 30, 1995, October 9, 1995, and October 16, 1995, Diersen requested Edelman in writing to seek an extension of time for discovery, but Edelman failed to do so. On October 17, 1995, Edelman filed a motion for leave to withdraw. On November 27, 1995, the District Court granted Edelman’s motion for withdrawal and gave Diersen until December 14, 1995 to respond to CCE’s motion for summary judgment.

In December 21, 1995, the District Court relied on Smith v. Walt Bennett Ford, Inc., 864 S.W.2d 817 (Ark. 1993) and granted CCE summary judgment based on assumptions that the old car exemption was valid and that CCE had not knowingly waived its right to not certify the cars’s mileage. In response to Diersen’s motion for reconsideration, CCE argued that it had not known of the old car exemption and that it had not knowingly waived its right to not certify the car’s mileage. Diersen submitted many material facts that evidenced that CCE either knew or should have known of the old car exemption, but the District Court accepted CCE’s argument that it was ignorant of the old car exemption.

The District Court, knowing that Diersen’s discovery was not complete, granted CCE summary judgment without considering the sufficiency of Diersen’s evidence that CCE had provided Diersen with an inaccurate 22,600 mile odometer statement with intent to defraud and that CCE had not made Diersen a valid refund offer. However, subsequent to its grant of summary judgment, the District Court Magistrate Judge recommended denial of CCE’s $10,000 motion for sanctions that charged Diersen with filing a frivolous suit. The record shows that the Magistrate Judge made statements and reached conclusions that the car had been driven 75,000 miles and that Diersen had introduced sufficient evidence for a jury to decide if CCE intended to defraud.

On appeal, as Diersen understands it, the Seventh Circuit overturned Smith concerning NHTSA’s exemptions and concluded that certifying a motor vehicle’s mileage brings the transaction under the Act irrespective of (a) NHTSA’s exemptions, (b) the seller’s knowledge or lack of knowledge of NHTSA’s exemptions, or (c) the validity or invalidity of NHTSA’s exemptions. In addition, relying on many cases including the 1994 Ninth Circuit decision in Orca Bay Seafoods v. Northwest Truck Sales, Inc., 32 F.3d 433 which invalidated NHTSA’s heavy truck exemption, the Seventh Circuit invalidated the old car exemption stating that the District Court had “erred in relying upon this exemption when it granted summary judgment to the CCE.” However, relying solely on its 1992 decision in Halpin v. W.W. Grainger, Inc., 962 F.2d 685, the Seventh Circuit concluded that its task was to review the record and controlling law de novo. The Seventh Circuit then went on to make the following initial factual findings and credibility determinations to develop the record:

— CCE had “concluded that the car was in good condition and did not suspect that the odometer reading was inaccurate” and “CCE’s own inspection of the vehicle did not suggest that the 22,600 mile figure was inaccurate or erroneous;”

— Diersen’s subsequent investigation of the car’s title history was “extensive;”

— CCE made a valid refund offer, Diersen “refused” that offer, and Diersen’s “allegation of fraudulent or evil intent is belied by the fact that the CCE, in good faith, offered to allow Diersen to return the car for full refund of his money (an offer which Diersen rejected, preferring to pursue this lawsuit);”

— a jury might believe the prior owners’ “clerical error” explanation for the 75,000 mileage show on two prior titles and three prior title applications rather than the testimony that Diersen’s expert witness could give that the car had been driven “greatly in excess of 22,600 miles;”

— CCE was not more than merely negligent when it (a) ignored the car’s unusually low claimed mileage in relation to its age, the “worn condition of the drivers seat,” and the “damaged condition of the vehicle’s oil pan;” (b) did not conduct “further inquiry into the car’s mileage;” and (c) relied on the 22,600 mileage claim made by the individual it purchased the car from; and

— “there is, in short, no evidence to suggest that CCE knew or suspected that the 22,600 mile figure was mistaken, much less that it intended to defraud Diersen by providing an inaccurate odometer reading” and “Diersen has not introduced any evidence showing that the CCE acted with intent to defraud” and there was “insufficient evidence upon which to base a finding of odometer fraud.”

Relying the above initial factual findings and credibility determinations and only one other decision–its 1988 decision in Jones v. Hanley Dawson Cadillac, 848 F.2d 803–the Seventh Circuit affirmed the District Court grant of summary judgment on other grounds. The Seventh Circuit did this without acknowledging or addressing (a) the bulk of the material facts that favored Diersen’s argument that CCE should have been suspicious of the car’s claimed mileage, (b) the District Court Magistrate Judge’s subsequent statements and conclusions favoring Diersen, or (c) the fact that discovery was not complete. The Seventh Circuit decided that “a rational jury could not find in Diersen’s favor with respect to the CCE’s alleged intent to defraud, a crucial element of Diersen’s claim.”

In his April 14, 1997 Petition for Rehearing, Diersen pointed out that in Jones v. Hanley Dawson Cadillac, the only fact the plaintiff could find to prove that the dealer should have been suspicious was a very minor one–a missing turn signal lens. In addition, Diersen pointed out that in this case, many additional important material facts were in the record that the Seventh Circuit had not acknowledged or addressed in its opinion that evidenced that CCE should have been suspicious of the mileage claim. For example, CCE knew that extensive mechanical, rust, and body restoration work had been done; CCE did not receive any documentation to support the claimed mileage other than the car’s title; CCE obtained the car for only about half its wholesale value; CCE had no prior business dealings with the individual it purchased the car from; none of the car’s tires or its spare were original; the speedometer clicked and made grinding noises; the tachometer significantly overstated engine speed; and many trim parts had been severely pitted and re-chromed. Diersen argued in his petition that taken as a whole, these facts would have made CCE and any other dealer suspicious of the mileage claim and would have prompted them to investigate the car’s mileage history.

In his petition, Diersen also cited additional material facts in the record that the Seventh Circuit did not acknowledge or address in its opinion. For example, CCE is a large profitable car dealer that had specialized in selling expensive classic, antique, and collector cars since 1989; CCE refused Diersen’s request to put its purported refund offer in writing; Edelman failed to depose the car’s first owner, the individual who had possession of the car for a substantial period of time between the first and second owner of record, and the CCE salesman Diersen dealt with; Edelman failed to depose as adverse parties CCE’s president and the car’s second, third, or fourth owner of record; and the Magistrate Judge had subsequently made statements and reached conclusions favoring Diersen.

Finally, on May 28, 1997, relying on Section 332 in its 1997 appropriations act, Public Law 104-205 (Sept. 30, 1996), DOT, acting through NHTSA, sent a letter (Appendix C, A-19) to the American Association of Motor Vehicle Administrators and posted it on NHTSA’s World Wide Web internet site. In that letter, DOT announced that it was rejecting that part of the Seventh Circuit’s decision that invalidated NHTSA’s old car exemption and that it was going to “publish a final rule repromulgating all of the exemptions currently contained in 49 CFR 580.6;” that it was going to “make this final rule effective immediately upon publication in the Federal Register; and that it was going to “post the Federal Register notice and other relevant information on its World Wide Web site.”

REASONS FOR GRANTING THE WRIT

I. THE SEVENTH CIRCUIT DECISION CONCERNING THE INTENT TO DEFRAUD ISSUE CREATES AN INTOLERABLE CONFLICT WITH OTHER DECISIONS, IT DIRECTLY CONFLICTS WITH THE INTENT OF THE ACT, IT SEVERELY HINDERS ENFORCEMENT OF THE ACT, AND IT SEVERELY HARMS ODOMETER FRAUD VICTIMS’ RIGHTS UNDER THE ACT

According to many cases decided under the Act, dealers are charged with having a greater knowledge of the Act than non-dealers and as a result, when a dealer violates the Act, a presumption exists that the violation was committed with intent to defraud. According to these cases, dealers are required to affirmatively look for evidence that odometer statements are false and if the dealer has reason to be suspicious of a car’s claimed mileage, it must do more than test drive and visually inspect the car, it must conduct a mileage investigation. This investigation would typically include, at a minimum, obtaining prior title documents and/or contacting prior owners.

Conflicts With Other Decisions The Seventh Circuit’s decision in Diersen creates an intolerable conflict with many other cases decided under the Act. For example, it conflicts with Nieto v. Pence, 578 F.2d 640 (5th Cir. 1978) and Haynes v. Manning, 917 F.2d 450 (10th Cir. 1990) because in those cases, the courts found that a dealer is not entitled to rely on an odometer statement as a matter of law and that blind reliance on a transferor’s statement in the face of evidence suggesting inaccuracy is not permitted. In Diersen, the Seventh Circuit found that CCE was not more than merely negligent when it relied on the mileage claim made by the individual it purchased the car from in the face of the evidence suggesting inaccuracy.

The Diersen decision conflicts with Nieto; Adams v. Neil Huffman Nissan, Inc., 1989 Ky.App. LEXIS 51 (1989); Ragland v. Dumm, 1994 Ohio App. LEXIS 6030 (1994); and Auto Sport Motors, Inc. v. Bruno Auto Dealers, Inc. and Brielle Motors, Inc., 721 F.Supp. 63; (S.D.N.Y. 1989) because in those cases, the courts found that a dealer should be suspicious if a car’s claimed mileage is unusually low in relation to its age. These courts found that the following mileage claims, although not necessarily by themselves alone, should have made the dealers suspicious: 14,736 miles on a 10-year-old truck in Nieto; 33,000 miles on a 6-year-old car in Adams; 27,000 miles on a 6-year-old car in Ragland; and 29,771 miles on a 2-year-old car in Auto Sport Motors. According to court in Auto Sport Motors, “Circumstances giving rise to a duty to inquire include unreasonably low mileage in relation to the year of the car, the condition of the tires and the condition of the interior and exterior of the car.” In Diersen, the mileage claim was 22,600 miles on a 26-year-old car and many other material facts suggested inaccuracy including a worn driver’s seat. It is well known that many collector car buyers will pay a premium for low mileage cars. CCE argued in its response to Diersen’s petition for rehearing that dealers like CCE that specialize in selling collector cars should not be expected to be suspicious of low mileage claims because they see so many such claims that they are no longer “surprised.” Accepting such an argument would give dealers like CCE a license to engage in odometer fraud. Diersen argues that dealers like CCE should be held to a higher standard to detect odometer discrepancies because they routinely buy and sell old cars with low mileage claims.

The Diersen decision conflicts with S&S Toyota, Inc. v. Kirby, 649 So. 2d 916 (Fla. Dist. Ct. App. 1995) and Heffler v. Joe Bells Auto and John Kennedy Ford, 946 F. Supp. 348, LEXIS 16061 (Penn. 1996) because in those cases the courts found that a worn drivers seat should have made the dealer suspicious. In Diersen, the driver’s seat was worn.

The Diersen decision conflicts with Ragland, and Levine v. Parks Chevrolet, Inc., 76 N.C.App. 44, 331 S.E.2d 747, 751 (1985) because in those cases, the courts found that several pieces of equipment, most noticeably the tires, not being of the original brand should have made the dealer suspicious. In Diersen, virtually all the car’s original mechanical parts had been replaced, including its tires and spare.

The Diersen decision conflicts with Oettinger v. Lakeview Motors, Inc., 675 F.Supp. 1488 (E.D. Va. 1988) because in that case, the court found that to make affirmative claims about mileage without knowledge is either intentionally deceitful or reckless. In Diersen, CCE made affirmative claims about the car’s mileage even though the individual that CCE bought the car from presented no documentation such as (a) maintenance, repair, or restoration receipts, (b) emissions testing documents, or (c) insurance records that showed that the car had been driven only 22,600 miles and had only one prior owner. If prior owners’ low mileage claims were true, documentation would have been kept, especially by the individual that sold CCE the car, and passed on from owner to owner.

The Diersen decision conflicts with Jones v. Fenton Ford, Inc., 427 F.Supp. 1328 (D. Conn. 1977) because in that case, the court found that intent to defraud existed despite the fact that “actual knowledge” of the violation was not shown. The court stated that civil liability could be imposed when a defendant’s statements are recklessly or carelessly made, either without knowledge of their truth or falsity, or without reasonable grounds for belief in their truth. In Diersen, while many material facts showed that CCE certified the car’s mileage without reasonable grounds to believe the mileage claim, the Seventh Circuit imposed a higher requirement, namely that Diersen had to present sufficient evidence to prove that CCE “knew or suspected” that an odometer discrepancy existed.

Finally, the Diersen decision conflicts with Ragland because in that case, the court found that the dealer’s being able to obtain a car for a low price should make the dealer suspicious of the car’s low claimed mileage. In Diersen, the CCE obtained the car for approximately half its wholesale value.

Conflict With The Intent of the Act Any decision that discourages buyers from relying on dealers’ odometer disclosure statements conflicts with the intent of the Act. Because the decision in Diersen denies a buyer his right to a jury trial to resolve a dispute involving a dealer’s odometer disclosure statement, it clearly discourages other buyers from relying on such statements, and therefore, the decision conflicts with the intent of the Act. Without the right to a jury trial, many federal statutes, including the Federal Odometer Act, are virtually impotent for civil action purposes, especially for civil actions by consumers against businesses. Because a very large percentage of cases involving such statutes are routinely resolved by summary judgment in favor of businesses, consumers who have suffered damages, including odometer fraud victims, often do not seek remedy at law, but instead, they simply pretend that they are unaware of any mileage discrepancy and simply “pass the fraud along.” In addition, knowing that they are virtually “immune from suit,” businesses, including car dealers, are more prone to engage in fraudulent practices, including odometer fraud. Odometer fraud victims not being allowed to present their cases to juries is a major reason why odometer fraud is a costly problem that is growing significantly.

Hindrance Of Enforcement Of The Act According to NHTSA, odometer fraud is increasing dramatically. According to some estimates, it is currently costing consumers as much as $10 billion each year. The Department of Justice cites inadequate state processing of titles as a major contributing cause and estimates that on average, odometer fraud costs the typical victim about $4,000. While NHTSA has asked Congress for more funds to fight odometer fraud, it currently has only four investigators with a $700,000 budget working on the problem, the same number of investigators it had in 1984. To conserve its budget, NHTSA prosecutes only the biggest of the big cases–at least 200 cars have be involved and that might result in only a two-year sentence. Concerning NHTSA’s growing backlog of leads, the Chief of NHTSA’s odometer fraud staff, Richard Morse, has been quoted in the media as saying, “It’s really frustrating for me, as manager for nationwide enforcement, because we can’t do anything more about it.”

If sufficient evidence for a jury to decide if a dealer should have been suspicious of a car’s claimed mileage does not exist in Diersen, then no amount of evidence would make any dealer suspicious of any mileage claim and the Federal Odometer Act has been rendered impotent. The Diersen decision severely hinders the ability of odometer fraud victims to bring civil actions against dealers. It also severely hinders the ability of NHTSA and other governmental entities to bring criminal actions against dealers. Given its limited resources, to enforce the Act, NHTSA is almost totally dependant on individuals bringing civil actions against dealers and other governmental entities bringing criminal actions against dealers. Therefore, anything that hinders the ability of individuals or governmental entities to bring such actions hinders enforcement of the Act.

Harm To Odometer Fraud Victims’ Rights The Diersen decision severely hinders the ability of odometer fraud victims to bring civil actions against dealers because the decision effectively grants dealers immunity from jury trials unless the dealer virtually admits that it intended to defraud. Therefore, the decision severely harms odometer fraud victims’ rights.

II. THE SEVENTH CIRCUIT MISAPPLIED THE SEVENTH AMENDMENT TO THE UNITED STATES CONSTITUTION AND THE FEDERAL RULES OF CIVIL PROCEDURE CONCERNING THE RIGHT TO A JURY TRIAL

Many decisions have clarified how the Seventh Amendment to the United States Constitution and Rules 12(c), 38(a), and 56(c) of the Federal Rules of Civil Procedure should be applied concerning the right to a jury trial. The following decisions show that the Seventh Circuit misapplied the amendment and the rules in Diersen. According to the court in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248; 91 L. Ed. 2d 202; 106 S. Ct. 2505 (1986), a genuine issue for trial is one which the evidence is such that a reasonable jury could return a verdict for the nonmoving party. However, in Diersen, the Seventh Circuit’s conclusion that a jury could not return a verdict for Diersen is based on an assumption that the jury would reject evidence that is stronger, for example, unusually low claimed mileage in relation to age, than weaker evidence that juries accepted in other cases. In addition, the Seventh Circuit failed to acknowledge or address in its opinion the bulk of Diersen’s evidence that showed that CCE should have been suspicious of the mileage claim.

According to the court in Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U.S. 912, 122 L.Ed. 2d 659, 133 S.Ct. 1262 (1993), when deciding a motion for summary judgment, a court must draw all reasonable inferences in light most favorable to the nonmovant. Moreover, a court may not consider the credibility or weight of the evidence in deciding a motion for summary judgment, even if the quantity of the moving party’s evidence far outweighs that of its opponent. In addition, according to the court in Odom v. Roberts, 606 So. 2d 114, 118 (Miss. 1992), a court’s standard of review is limited when determining the sufficiency of the evidence on a motion for a directed verdict and when contradictory testimony exists, the court should “defer to the jury, which determines the weight and worth of testimony and credibility of the witness at trial.”

However, in Diersen, the Seventh Circuit decided in CCE’s favor even though no documentation, such as maintenance or repair receipts, existed to support the 22,600 mileage claim and the Seventh Circuit based its decision in large part on its credibility determination that a jury might believe CCE and the prior owners’ “clerical error” explanation for the 75,000 mileage shown on prior titles rather than the testimony that Diersen’s expert witness could give that the car had been driven “greatly in excess of 22,600 miles.” If the car’s actual mileage was under 22,600, one of the car’s prior owners would have had the purported clerical error corrected in a timely and proper manner. “Corrected” titles should have been issued to replace the car’s purportedly erroneous second and third titles. The Seventh Circuit ignored the fact that the car’s second owner of record stated under oath that in 1983 the car was in “poor condition,” its body was “tattered pretty good,” and there were other rust spots in addition to the rear quarter panels, which were completely rusted out. Other than its own and the prior owners’ self-serving, unsupported, and disputed testimony, the only evidence that CCE submitted to show that CCE was not and should not have been suspicious of the mileage claim was that the individual who sold the car to CCE certified its mileage.

According to the courts in Johnson v. Runyon, et. al., 47 F.3d 911 (7th Cir. 1995) and Donovan v. City of Milwaukee, 17 F.3d 944, 947 (7th Cir. 1994), all reasonable inferences from the record are to be drawn in favor of the non-moving party. According to the court in Trap Rock Industries, Inc. v. Local 825, 982 F.2d 884 (3rd Cir. 1992), a party opposing summary judgment must do more do more than rest upon allegations, general denials, or vague statements. However, in Diersen, the Seventh Circuit based its decision on crucial findings that were based solely on CCE’s and the prior owners’ unsupported, self-serving, and disputed claims that the Seventh Circuit erroneously stated as being fact.

According to the court in Landrum v. Goddard, 921 F.2d 61 (5th Cir. 1991), contrary to other types of fraud claims, plaintiff’s burden of proof under the Federal Odometer Act is a preponderance of evidence. However, in Diersen, while Diersen submitted two titles and three title applications that showed the car had been driven at least 75,000 miles and a preponderance of evidence that CCE should have been suspicious of the 22,600 mileage claim and nether CCE nor the prior owners submitted any documentation, such as maintenance or repair receipts, to support their 22,600 mileage claim, the Seventh Circuit found in CCE’s favor.

While the Federal Odometer Act does not provide for a jury trial in all cases, the test, according to Pernell v. Southall Realty, 416 U.S. 363, 375 (1974), is “whether the action involves rights and remedies of the sort traditionally enforced in an action at law, rather than an action in equity or admiralty.” Because an action under the Act is based upon fraudulent conduct and seeks a remedy at law, there is clearly a right to jury trial unless the plaintiff’s suit is frivolous. The important recurring question of whether plaintiffs in non-frivolous civil actions involving federal statutes such as the Federal Odometer Act should have the right to a jury trial according to the Seventh Amendment and the Federal Rules of Civil Procedure has not been directly addressed by any case and is not likely to be resolved by future cases, and therefore, it should be settled by the Supreme Court of the United States.

III. THE SEVENTH CIRCUIT’S AFFIRMATION OF SUMMARY JUDGMENT ON OTHER GROUNDS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS

The Seventh Circuit’s affirmation of summary judgment on other grounds departed from the accepted and usual course of judicial proceedings because discovery had not been completed and Diersen had not had an adequate opportunity to introduce evidence or fully brief his arguments; the District Court Magistrate Judge had subsequently made statements and reached conclusions favoring Diersen; the Seventh Circuit based its affirmation on credibility determinations that had not been addressed by a jury or by the District Court Judge; and the Seventh Circuit decision failed to acknowledge or address the bulk of the material facts that favored Diersen’s argument.

The District Court granted CCE summary judgment even though Diersen’s discovery had not been completed and Diersen had not had an adequate opportunity to argue his case. The record clearly shows that Edelman had failed to depose the car’s original owner, the individual who had possession of the car for a substantial period of time between the car’s first and second owner of record, and the CCE salesman that Diersen dealt with. In addition, Edelman had failed to depose as adverse parties CCE’s president as well as the car’s second, third, and fourth owners of record. The record shows that on September 30, 1995, October 9, 1995, and October 16, 1995, Diersen requested Edelman to seek an extension of time to complete discovery as well as postpone the jury trial, but Edelman failed to do so. Because the District Court relied on the old car exemption to grant CCE summary judgment, in his subsequent pleadings, Diersen did not focus on evidencing that CCE’s mileage statement was inaccurate or that CCE had intended to defraud Diersen. Because discovery was not complete, the Seventh Circuit made many erroneous initial factual findings concerning the intent to defraud issue and took many unsupported, self-serving, and disputed claims made by CCE and the prior owners and stated them as though they were facts.

On April 18, 1996, the District Court Magistrate Judge in the case stated in open court that “you probably have a wonderful state claim of fraud” and that “you may have a very, very fine state claim on misrepresentation, fraud, and consumer fraud.” In his September 25, 1996 Report and Recommendation, the Magistrate Judge concluded that the car “had been driven some 75,000 miles.” Congress passed the Federal Odometer Act in part because of the major difficulties consumers face in proving odometer fraud in state courts. If the Magistrate Judge believes that Diersen has a strong state claim of fraud, certainly Diersen has an even stronger federal claim of fraud under the Act.

Diersen’s expert witness, Mike Grippo, is a Professional Automobile Appraiser who has testified in odometer fraud cases. By stating “if a jury believed Grippo, it could perhaps find that the odometer statement provided by the CCE was erroneous,” the Seventh Circuit accorded great credibility to the self-serving, unsupported, and disputed opinions voiced by three of the car’s prior owners. But not all the car’s prior owners were deposed and those that were deposed, were not deposed as adverse parties. They provided no documentation to support their opinions and they have every reason to lie about the car’s mileage. The facts clearly show that they failed to comply with the mileage disclosure requirements of the Act as well as the Illinois Odometer Act and that they benefitted from “passing the fraud along.” Obviously, CCE also has every reason to lie that it was not suspicious of the car’s claimed mileage.

The Seventh Circuit erred when it accorded more credibility to the car’s prior owners and to CCE than to Mr. Grippo. The statements made by the car’s prior owners and CCE are nothing more than self-serving, unsupported, and disputed opinions. On the other hand, Mr. Grippo has indicated that he will testify to a jury that in his expert opinion, the car was driven at least 75,000 miles, that sufficient facts existed to make CCE suspicious of the 22,600 mileage claim, and that if CCE had done a minimal mileage investigation, it would have learned of the odometer discrepancy. It is well established that it is the jury’s responsibility and not the court’s to assess the credibility of witnesses. Clearly, if the Seventh Circuit had accorded proper weight to the above facts and to Mr. Grippo’s testimony, it would have found that a rational jury could have agreed with the Magistrate Judge and Mr. Grippo and concluded that the car had been driven at least 75,000 miles and that Diersen had introduced sufficient evidence of odometer fraud.

In his April 14, 1997 Petition for Rehearing, as discussed above, Diersen cited many additional important material facts in the record that the Seventh Circuit had not acknowledged or addressed in its opinion that evidenced that CCE should have been suspicious. Diersen argued in his petition that taken as a whole, those facts would have made CCE and any other dealer suspicious and would have prompted them to investigate the car’s title history.

Clearly, the Seventh Circuit should not have decided issues involving odometer statement accuracy or the intent to defraud because the District Court did not grant summary judgment on those grounds, its Magistrate Judge subsequently made statements and reached conclusions favoring Diersen even though Diersen’s discovery was not complete and Diersen had not had an adequate opportunity to introduce evidence or fully brief his arguments. Clearly, based on the material facts in the record as discussed above, the Seventh Circuit should have reversed its March 31, 1997 decision concerning the sufficiency of evidence of odometer fraud and remanded the case to the District Court for jury trial.

IV. THE SEVENTH CIRCUIT MADE ERRONEOUS FACTUAL FINDINGS AND CREDIBILITY DETERMINATIONS TO DEVELOP THE RECORD CONCERNING THE INTENT TO DEFRAUD ISSUE

Because discovery was not complete and Diersen had not had an adequate opportunity to argue his case, the Seventh Circuit made many erroneous initial factual findings and credibility determinations to develop the record concerning the intent to defraud issue. The Seventh Circuit took many unsupported, self-serving, and disputed claims made by CCE and stated them as though they were facts. For example, the Seventh Circuit found that CCE had “concluded that the car was in good condition and did not suspect that the odometer reading was inaccurate” and “CCE’s own inspection of the vehicle did not suggest that the 22,600 mile figure was inaccurate or erroneous.” In reality, these are unsupported, self-serving, and disputed claims made by CCE that the Seventh Circuit erroneously stated as being fact.

The Seventh Circuit found that Diersen’s subsequent investigation of the car’s title history was “extensive.” In reality, that is an unsupported, self-serving, and disputed claim made by CCE that the Seventh Circuit erroneously stated as being fact. Diersen did not do an “extensive” investigation of the car’s title history. He merely did what CCE could and should have done. He merely obtained copies of the car’s titles and title applications by completing a simple form and sending it with $4 to the Illinois Secretary of State. Because those documents showed that the car had been driven at least 75,000 miles, he contacted the car’s prior owners by phone. Another minimal effort that CCE could have and should have made that would not have required obtaining title documents was to talk to the individual who sold the car to the individual that CCE bought it from. That alone would have disclosed the odometer discrepancy and that the car had more prior owners than claimed.

The Seventh Circuit found that CCE made a valid refund offer, Diersen “refused” that offer, and Diersen’s “allegation of fraudulent or evil intent is belied by the fact that the CCE, in good faith, offered to allow Diersen to return the car for full refund of his money (an offer which Diersen rejected, preferring to pursue this lawsuit).” In reality, these are unsupported, self-serving, and disputed claims made by CCE that the Seventh Circuit erroneously stated as being fact. While CCE indicated that it might take return of the car and refund Diersen what he had paid CCE, CCE refused to put anything in writing and it refused to discuss the $2,600 that Diersen had invested in the car. CCE’s purported refund offer was oral, vague, and it was not made directly to Diersen. Diersen did not refuse or reject CCE’s purported offer; Diersen merely asked CCE to put it in writing, but CCE never did. If CCE had made a valid and reasonable settlement offer, Diersen would have accepted it. CCE never responded to a written settlement offer that Diersen provided CCE on April 30, 1996. Diersen did not prefer to file a lawsuit against CCE and would not have done so if Edelman did not believe that CCE intended to defraud Diersen. While Edelman withdrew, he has never indicated that he does not continue to believe that CCE intended to defraud Diersen.

The Seventh Circuit found that a jury might believe the prior owners’ “clerical error” explanation for the 75,000 mileage show on prior titles rather than the testimony that Diersen’s expert witness could give that the car had been driven “greatly in excess of 22,600 miles.” In reality, to reach that finding, the Seventh Circuit made a credibility determination that it clearly should not have made.

The Seventh Circuit found that CCE was not more than merely negligent when it (a) ignored the car’s unusually low claimed mileage in relation to its age, the “worn condition of the drivers seat,” and the “damaged condition of the vehicle’s oil pan;” (b) did not conduct “further inquiry into the car’s mileage;” and (c) relied on the 22,600 mileage claim made by the individual it purchased the car from. The first argument that CCE and the Seventh Circuit rely on is CCE’s claim that it “concluded that the car was in good condition and did not suspect that the odometer reading was inaccurate” and “CCE’s own inspection of the vehicle did not suggest that the 22,600 mile figure was inaccurate or erroneous.” The second argument that CCE the Seventh Circuit rely on is CCE’s claim that only an “extensive” investigation would have disclosed the mileage discrepancy. The third argument that CCE and the Seventh Circuit rely on is CCE’s claim that it was justified in relying on the 22,600 mileage claim made by the individual it purchased the car from. Clearly, the Seventh Circuit’s findings are based solely on CCE’s unsupported, self-serving, and disputed claims cited above that the Seventh Circuit erroneously stated as being fact. In addition, they are clearly erroneous findings because they assert erroneous criteria. It is clear from cases decided under the Act that dealers cannot (a) ignore material facts such as unusually low claimed mileage in relation to vehicle age or the “worn condition of the drivers seat;” (b) escape responsibility by claiming that only an “extensive” mileage investigation would have disclosed the mileage discrepancy; or (c) rely on mileage claims made by individuals they purchase cars from unless no material facts existed that would have made it or other dealers suspicious of the mileage claim.

The Seventh Circuit found that “there is, in short, no evidence to suggest that CCE knew or suspected that the 22,600 mile figure was mistaken, much less that it intended to defraud Diersen by providing an inaccurate odometer reading” and “Diersen has not introduced any evidence showing that the CCE acted with intent to defraud” and there was “insufficient evidence upon which to base a finding of odometer fraud.” Clearly, these crucial findings sound like CCE’s arguments and are based solely on CCE’s unsupported, self-serving, and disputed claims cited above that the Seventh Circuit erroneously stated as being fact. In addition, they are clearly erroneous findings because they assert erroneous criteria. It is clear from cases decided under the Act that odometer fraud victims do not have to prove that the dealer “knew or suspected” that an odometer discrepancy existed. All they have to prove is that the dealer should have known of the discrepancy or should have suspected it. The record in this case shows more than sufficient evidence exits that CCE should have known of the discrepancy or should have suspected it.

V. BECAUSE ACT DOES NOT INCLUDE ANY EXEMPTIONS AND THE ACT HAS NOT BEEN AMENDED TO GIVE DOT AUTHORITY TO GRANT ANY EXEMPTIONS, IT WAS IMPROPER FOR DOT TO REJECT THE SEVENTH CIRCUIT’S FINDING THAT THE OLD CAR EXEMPTION IS INVALID

The Act does not exempt any class of motor vehicle nor has it been amended to give DOT authority to grant exemptions for any class of motor vehicle. In 1988, DOT, acting through NHTSA, issued regulations that exempted certain classes of motor vehicles from the Act’s mileage disclosure requirements. Regulation 49 CFR 580.6(a)(1) exempted trucks over 16,000 pounds. Regulation 49 CFR 580.6(a)(3) exempted cars over 10 years old. Regulation 49 CFR 580.6(b) exempted new cars prior to their first retail sale. In 1994, in Orca Bay Seafoods v. Northwest Truck Sales, Inc., 32 F.3d 433, the Ninth Circuit invalidated the heavy truck exemption because Act does not include any exemptions and the Act has not been amended to give DOT authority to grant any exemptions. In Diersen, the Seventh Circuit invalidated the old car exemption for the same reason. In addition, in Diersen, the Seventh Circuit strongly indicated that all NHTSA’s exemptions, including the new car exemption, were invalid.

On May 28, 1997, relying on Section 332 in its 1997 appropriations act, Public Law 104-205 (Sept. 30, 1996), NHTSA sent a letter to the American Association of Motor Vehicle Administrators and posted it on its World Wide Web internet site. In that letter, NHTSA announced that it was rejecting the Seventh Circuit’s invalidation of the old car exemption and that NHTSA was going to “publish a final rule repromulgating all of the exemptions currently contained in 49 CFR 580.6,” that it was going to “make this final rule effective immediately upon publication in the Federal Register, and that it was going to “post the Federal Register notice and other relevant information on its World Wide Web site.” According to Section 332, “Notwithstanding any other provisions of law, the Secretary may use funds appropriated under this Act, or any other subsequent Act, to administer and implement the exemption provisions of 49 CFR 580.6 and to adopt or amend exemptions from the disclosure requirements of any class or category of vehicles that the Secretary deems appropriate.”

Clearly, it was improper for NHTSA to reject the Seventh Circuit’s invalidation of the old car exemption because the Seventh Circuit did not find Section 332 to be relevant, let alone controlling, or it would have addressed it in its opinion. The fact remains that according to the Act, no class of motor vehicle, including old or new cars or trucks are exempt from the Act’s mileage disclosure requirements unless Congress amends the Act to specifically exempt them or to specifically give DOT the authority to exempt them. According to the National Consumer Law Center, Inc.’s (NCLC) May/June 1997 NCLC REPORTS, “NHTSA is attempting to limit the impact of Diersen by taking the (questionable) position that the language in a 1996 appropriation bill provides NHTSA with statutory authority to exempt cars over 10 years old.”

Because NHTSA rejects the Seventh and Ninth Circuit decisions in Diersen and Orca, dishonest dealers can rely on Smith v. Walt Bennett Ford, Inc. and issue fraudulent odometer disclosure statements for old cars and heavy trucks and escape the Act’s penalties by claiming that they were not aware that they were not required to issue mileage disclosure statements, and therefore, they had not voluntarily relinquished their right to not issue such statements.

Concerning new cars and trucks, because NHTSA rejects the Seventh and Ninth Circuit decisions, the abuses brought to light in Maugh v. Chrysler Corporation, 818 S.W.2d 658 (Mo.App. 1991) and Carpenter v. Chrysler Corp., 853 S.W.2d 346 (Mo.Ct.App. 1993) are more likely to continue. In connection with the Maugh case, Lee Iaccocca is reported in the national press to have admitted that Chrysler had disconnected odometers on new vehicles, driven them, in some instances wrecked and repaired them, and sold them to their dealers as “new” with the odometers reconnected. Chrysler is reported to have admitted doing this with over 60,000 cars over a three year period and sought to defend itself on the basis that this was a standard industry practice. According to the court in Maugh, “Chrysler complained it was precluded from offering evidence about the OEP program being part of an industry wide custom and practice. Chrysler also argued industry custom as relevant to fraud.” If car and truck manufacturers were required to issue odometer disclosure statements for new cars and trucks prior to first retail sale, odometer fraud of the type described in Maugh and Carpenter would be significantly hindered. Dealers and consumers would have a stronger basis to bring civil actions against car and truck manufacturers under Section 32710 and governmental entities would have a stronger basis to bring criminal actions.

CONCLUSION

The issues involved in this case, especially the right to a jury trial and the obligation of executive branch agencies to not exceed the authority given them by the legislative branch and to follow decisions rendered by the judicial branch, are very important issues that this Court should address. The above clearly shows that the Seventh Circuit decision concerning the intent to defraud issue creates an intolerable conflict with other decisions, it directly conflicts with the intent of the Act, it severely hinders enforcement of the Act, and it severely harms odometer fraud victims’ rights under the Act. The above also clearly shows that the Seventh Circuit misapplied the Seventh Amendment to the United States Constitution and the Federal Rules of Civil Procedure concerning the right to a jury trial.

Clearly, the Seventh Circuit’s affirmation of summary judgment on other grounds departed from the accepted and usual course of judicial proceedings because discovery had not been completed and Diersen had not had an adequate opportunity to introduce evidence or fully brief his arguments; the District Court Magistrate Judge had subsequently made statements and reached conclusions favoring Diersen; the Seventh Circuit based its affirmation on credibility determinations that had not been addressed by a jury or by the District Court Judge; and the Seventh Circuit decision failed to acknowledge or address the bulk of the material facts that favored Diersen’s argument. Clearly, the Seventh Circuit made erroneous factual findings and credibility determinations to develop the record concerning the intent to defraud issue.

Finally, because Act does not include any exemptions and the Act has not been amended to give DOT authority to grant any exemptions, it was improper for DOT to reject the Seventh Circuit’s finding that the old car exemption is invalid. For the above reasons, Diersen respectfully requests that this Court grant a Writ of Certiorari.

 

Respectfully submitted,

 

___________________________

David J. Diersen

Petitioner, Pro Se