FEDERAL ODOMETER STATUTE (intent to defraud requirement)
keywords, odometer rollback, statute, odometer case, automobile, federal odometer law, odometer fraud, fraud lawyer, odometer rollback claim, consumer fraud, deception, odometer law, odometer rollback claim,
Before FLAUM, Chief Judge, and BAUER and EVANS, Circuit Judges.
Plaintiff-appellant Garry Ioffe filed suit regarding a used car he purchased
from defendant-appellee Skokie Motor Sales, Inc., doing business as Sherman
Dodge, a car dealership. Although Ioffe alleges a violation of 49 C.F.R. §
580.5(c), a regulation promulgated under the federal Odometer Act, 49 U.S.C. §
32701 et seq., his claim is wholly unrelated to the vehicle's odometer or
mileage. For the reasons stated herein, we agree with the district court that an
Odometer Act claim that is brought by a private party and is based on a
violation of § 580.5(c) requires proof that the vehicle's transferor intended to
defraud a transferee with respect to mileage. Accordingly, we affirm the entry
of summary judgment in favor of Sherman Dodge.
[11] I. Background
[12] On September 12, 2001, Sherman Dodge purchased a 1993 Toyota Tercel, giving
its customer a trade-in allowance of only $500 for the car because its
certificate of title stated that it had been "rebuilt." On October 1, 2001,
Sherman Dodge sold the same Toyota Tercel to Garry Ioffe for $2,637.11, but did
not tell him that the car had been rebuilt or show him the car's title. At the
time of sale, Sherman Dodge gave Ioffe an odometer disclosure statement which
said that, to the best of Sherman Dodge's knowledge, the Tercel's odometer
reading of 90,258 was accurate. Although Sherman Dodge did not give it to Ioffe
at the time, the title listed the same mileage. Ioffe does not dispute the
accuracy of the disclosed mileage.
[13] Shortly after the purchase, Ioffe started having mechanical problems with
the Tercel. He consulted a mechanic and learned for the first time that the car
had been rebuilt. When Sherman Dodge refused to remedy the situation to his
liking, Ioffe traded in the car at another dealership, receiving $500 for it.
[14] On September 30, 2003, Ioffe filed suit against Sherman Dodge in federal
court, alleging two claims under Illinois law and one claim under the federal
Odometer Act. Following cross-motions for summary judgment, the district court
granted Sherman Dodge's motion for summary judgment on the Odometer Act claim,
denied Ioffe's motion on that claim, and declined to exercise supplemental
jurisdiction over Ioffe's state-law claims. In ruling on the federal claim, the
court stated that the Odometer Act requires a private plaintiff to prove (1) a
violation of the Act or a related regulation, and (2) that the violation was
committed with intent to defraud. The evidence viewed in the light most
favorable to Ioffe showed that Sherman Dodge had failed to disclose the mileage
in writing on the title in violation of 49 C.F.R. § 580.5(c), and that its
intent in withholding the title was fraudulent. Nevertheless, the district court
held that the Odometer Act claim failed as a matter of law because Sherman Dodge
intended to defraud Ioffe with regard to the car's rebuilt status and not its
mileage.
[15] Ioffe appeals, arguing that the district court misinterpreted the statute
and regulation, and that the "intent to defraud" element of an Odometer Act
claim based on a violation of 49 C.F.R. § 580.5(c) may be satisfied by
demonstrating fraudulent intent unrelated to a vehicle's mileage.
[16] II. Discussion
[17] Summary judgment is appropriate if the evidence presented by the parties "show[s]
that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). We review
the district court's grant of summary judgment de novo, viewing all facts and
drawing all reasonable inferences in the non-moving party's favor. Eisencorp,
Inc. v. Rocky Mountain Radar, Inc., 398 F.3d 962, 965 (7th Cir. 2005).
[18] The question before the Court-whether the Odometer Act creates a private
right of action based on a violation of 49 C.F.R. § 580.5(c) where the
transferor's fraudulent intent is unrelated to a vehicle's odometer or
mileage-comes to us as a matter of first impression. Neither the United States
Supreme Court nor any of the federal courts of appeals have addressed it. We
begin our inquiry into the proper interpretation of the statute and regulation
by determining "whether the language at issue has a plain and unambiguous
meaning with regard to the particular dispute in the case." Robinson v. Shell
Oil Co., 519 U.S. 337, 340 (1997). "The plainness or ambiguity of statutory
language is determined by reference to the language itself, the specific context
in which that language is used, and the broader context of the statute as a
whole." Id. at 341. "Our inquiry must cease if the statutory language is
unambiguous and 'the statutory scheme is coherent and consistent.' " Id. at 340
(quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240 (1989)).
[19] The Odometer Act requires the written disclosure of a vehicle's mileage
upon transfer and authorizes the Secretary of Transportation to prescribe
procedures for doing so:
[20] Under regulations prescribed by the Secretary of Transportation that
include the way in which information is disclosed and retained under this
section, a person transferring ownership of a motor vehicle shall give the
transferee the following written disclosure:
[21] (A) Disclosure of the cumulative mileage registered on the odometer.
[22] (B) Disclosure that the actual mileage is unknown, if the transferor knows
that the odometer reading is different from the number of miles the vehicle has
actually traveled.
[23] 49 U.S.C. § 32705(a)(1). Based upon this delegation of authority, the
National Highway Traffic Safety Administration ("NHTSA")*fn1 promulgated the
following regulation: "In connection with the transfer of ownership of a motor
vehicle, each transferor shall disclose the mileage to the transferee in writing
on the title or . . . on the document being used to reassign the title." 49
C.F.R. § 580.5(c). Finally, the section of the Odometer Act which creates a
private right of action provides in relevant part:
[24] (a) Violation and amount of damages.-A person that violates this chapter or
a 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.
[25] (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.
[26] 49 U.S.C. § 32710.
[27] Based on these provisions, Ioffe presents the following syllogism: a
plaintiff has a private right of action under § 32710 if there has been a
violation of the Odometer Act or any of its implementing regulations and the
violator intended to defraud the plaintiff; Sherman Dodge violated 49 C.F.R. §
580.5(c), promulgated pursuant to 49 U.S.C. § 32705(a)(1), by disclosing the
Tercel's mileage on a document other than its title, and Sherman Dodge intended
to defraud Ioffe by hiding the title's "rebuilt" designation; therefore, Ioffe
has a claim against Sherman Dodge under the Act. Upon consideration of the
language of the statute and the regulation, the specific context in which that
language is used, and the broader context of the statute and its implementing
regulations, see Robinson, 519 U.S. at 341, we conclude that Ioffe's first
premise misstates the law. Section 32710 does not create a private right of
action for all violations of the Act and regulations that are accompanied by any
"intent to defraud." Rather, where a plaintiff alleges a violation of 49 C.F.R.
§ 580.5(c), he must prove intent to defraud as to a vehicle's mileage. With a
correct statement of the law, Ioffe's syllogism, and his claim, fall apart.
[28] The provision of the Odometer Act that provides a private right of action
states: "A person that violates this chapter or a regulation prescribed . . .
under this chapter, with intent to defraud, is liable." 49 U.S.C. § 32710(a).
The verb "to violate" and its object "this chapter or a regulation" state the
prohibited conduct, while the adverbial phrase "with intent to defraud" modifies
the prohibited conduct and defines the way in which it must be committed for a
private claim to arise. Ioffe first tries to get to his desired interpretation
by separating these two aspects of the provision. He contends that we first
should ask if there was any violation, and then if there was any contemporaneous
intend to defraud. This is not a proper way to read the statute.
[29] When analyzing a prohibited act, we must construe general statements of
prohibited conduct (such as "[violation of] this chapter or a regulation") as
"shorthand designation[s] for specific acts or omissions which violate the Act
[or a regulation]." United States v. Int'l Minerals & Chem. Corp., 402 U.S. 558,
562 (1971). Because intent requirements modify specific alleged violations, we
must replace any shorthand designation for prohibited conduct with a specific
violation before interpreting the intent element. Cf. Int'l Minerals, 402 U.S.
at 561-62. Here, Ioffe alleges a violation of 49 C.F.R. § 580.5(c), which
provides in relevant part that each transferor of a motor vehicle "shall
disclose the mileage to the transferee in writing on the title." Replacing §
32710(a)'s shorthand designation with the specific conduct prohibited by §
580.5(c), we find that the Act creates the following private right of action: "A
person that [does not disclose the mileage to the transferee in writing on the
title], with intent to defraud, is liable."
[30] Word choice and sentence structure help clarify how the "intent to defraud"
element operates in this context. The use of "with" in "with intent to defraud"
indicates a link between the violative conduct and the intent requirement. The
conduct and the fraudulent intent are not two independent elements such that any
contemporaneous fraud will do. Rather, there is a prohibited act-not disclosing
the mileage to the transferee in writing on the title-which is modified by the
adverbial phrase "with intent to defraud." Thus, the private right of action
covers prohibited acts that are committed with fraudulent intent and excludes
cases where some fraudulent act happens to coincide with a violation of a
regulation but the violative act is done for reasons other than to perpetrate a
fraud.
[31] Next, Ioffe essentially argues that even if the "intent to defraud" element
must be read in connection with the specific violation, the intent requirement
does not necessarily apply to the prohibited conduct as a whole. He divides the
prohibited act into two parts-"does not disclose the mileage to the transferee"
and "in writing on the title"-and argues that § 32710 is satisfied if there is
fraudulent intent as to either the transferor's decision not to disclose the
mileage or its decision not to provide the title. There is no logical or
grammatical reason for this division. The more natural reading is to understand
the prohibited conduct as a whole-does not disclose the mileage to the
transferee in writing on the title-and to require that the intent to defraud
apply to the violation in its entirety. This reading suggests that there must be
fraudulent intent as to the decision not to disclose the mileage on the title,
not merely as to the decision to withhold the certificate of title for reasons
unrelated to the mileage disclosure.
[32] The specific context in which the statutory language appears also supports
this reading. Section 32705, the source of NHTSA's authority to promulgate 49
C.F.R. § 580.5(c), requires only that a transferor of a motor vehicle provide
written disclosure of "the cumulative mileage registered on the odometer." 49
U.S.C. § 32705(a)(1). In granting authority to issue implementing regulations,
Congress directed the Secretary of Transportation to prescribe "the way in which
[the cumulative mileage] information is disclosed and retained." Id. We have
understood this language as "limiting the NHTSA's regulatory authority to the
promulgation of mere procedural or logistical rules." Diersen v. Chi. Car Exch.,
110 F.3d 481, 485-86 (7th Cir. 1997).
[33] In Diersen, a purchaser of a used car brought suit against a dealership,
alleging violation of the disclosure requirements of the Odometer Act. The
district court granted the dealership's motion for summary judgment based on a
regulation which purported to exempt cars ten years old or older from the
disclosure requirements of the Act. Id. at 484. In reviewing the decision, we
observed that the regulation "effectively remove[d] a cause of action that
Congress has unambiguously provided to all victims of odometer fraud," and we
held that to do so was beyond NHTSA's delegated authority to promulgate "mere
procedural or logistical rules." Id. at 486-87 (emphasis in original).
[34] In enacting the Odometer Act, Congress created a private right to sue a
transferor for failure to disclose "the cumulative mileage registered on the
odometer," "with intent to defraud." See 49 U.S.C. §§ 32705(a)(1)(A); 32710(a).
In other words, it created a private claim for odometer or mileage fraud. If
Ioffe is correct about the interaction between § 32710 and 49 C.F.R. § 580.5(c),
NHTSA substantively and dramatically changed the law by creating a broad new
right of action for all fraud that involves the withholding of a certificate of
title. The regulation would do much more than prescribe "the way in which [the
cumulative mileage] information is disclosed and retained" by dramatically
increasing the number and types of private claims available under the Act and
expanding the private right of action far beyond its scope under the statute.
There is no indication that Congress intended to authorize NHTSA to effect such
a dramatic change in the law or that NHTSA intended to do so.
[35] Finally, looking to the broader context of the statute and its implementing
regulations, we see that a requirement that a transferor's fraudulent intent
relate to the vehicle's mileage comports with the expressed purposes of the Act
and regulations. The only stated purposes of the Act 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." 49
U.S.C. § 32701(b). Section 580.5(c) appears in Part 580 of Title 49 of the Code
of Federal Regulations, entitled "Odometer Disclosure Requirements," which has
the following stated "scope": "This part prescribes rules requiring transferors
. . . of motor vehicles to make written disclosure to transferees . . .
concerning the odometer mileage and its accuracy as directed by sections
[32705(a) and (c)]." 49 C.F.R. § 580.1. The stated purpose of Part 580, in
relevant part, is "to provide purchasers of motor vehicles with odometer
information to assist them in determining a vehicle's condition and value by
making the disclosure of a vehicle's mileage a condition of title." 49 C.F.R. §
580.2. These statements of purpose and scope indicate that the legislation is
concerned specifically with fraud related to a vehicle's mileage rather than
with all types of fraud that might involve the withholding of a vehicle's title.
[36] The language and context of the Odometer Act and its implementing
regulations support the conclusion that the Act's private right of action based
on violations of 49 C.F.R. § 580.5(c) extends only to cases where the transferor
intended to defraud a transferee about the vehicle's mileage. Although our
inquiry need go no further, see Robinson, 519 U.S. at 340, we briefly address
Ioffe's additional arguments in favor of a different interpretation of the
statute.
[37] First, Ioffe asserts that the Truth in Mileage Act of 1986, which amended
49 U.S.C. §§ 32702, 32705, and 32709, supports his interpretation because it
expressly required that the Odometer Act's mandatory disclosures be made on the
certificate of title. See Pub. L. No. 99-579 (Oct. 28, 1986). In fact, these
amendments undermine Ioffe's position. The amendments to § 32702 merely define
the terms "auction company," "leased motor vehicle," and "title." See 49 U.S.C.
§§ 32702(1), (4), (7); Pub. L. No. 99-579, § 2. The amendments to § 32705,
governing the "Disclosure Requirements on Transfer of Motor Vehicles," set forth
the conditions for licensure by a state of a transferred motor vehicle and
create additional information disclosure and retention requirements for leased
and auctioned cars. See §§ 32705(b)(1), (b)(3), (c), (d), and (e); Pub. L. No.
99-579, § 2. Although these amendments elevate the importance of the certificate
of title in the mileage disclosure process, they do not purport to alter the
scope of the private right of action created by § 32710. Instead, through its
amendments to § 32709, Congress enhanced the civil and criminal penalties that
may be imposed by the federal government, but did not amend the section
governing private claims. See §§ 32709(a)-(b); Pub. L. No. 99-579, § 3.
[38] These amendments highlight the important distinction between private and
public actions which Ioffe ignores. The Odometer Act creates a comprehensive
enforcement scheme of which private civil liability is only one part. Public
actions may lead to injunctions, civil monetary penalties, and criminal fines
and imprisonment. See 49 U.S.C. § 32709. While the private right of action based
on violations of 49 C.F.R. § 580.5(c) is limited to cases involving fraudulent
intent with regard to a vehicle's mileage, other sanctions or remedies may be
available for violations of § 580.5(c) that do not involve this type of intent.
To promote consistent compliance and to effectuate the purposes of the Act,
federal and state governments may strictly enforce the regulations governing the
"way in which [the cumulative mileage] information is disclosed and retained,"
regardless of the violator's intent. See 49 U.S.C. § 32705(a)(1). It does not
necessarily follow, as Ioffe suggests, that there must also be a private claim
for all violations of these procedural regulations. To the contrary, Congress
expressly limited the private right of action to the subset of violations that
are committed with fraudulent intent.
[39] Next, Ioffe argues that the Tercel's "status as rebuilt provides a direct
nexus with its odometer reading." Ioffe describes how rebuilders must face
choices in disclosing a vehicle's mileage when parts from different vehicles
with different odometer readings are used in the reconstruction. In this case,
however, Ioffe does not contend that the mileage disclosed by Sherman Dodge was
inaccurate or misleading. Rather, he suggests that transferors that conceal the
rebuilt status of cars often do so to defraud transferees as to mileage, and
that this can be prevented by recognizing a private right of action for all
claims based on this type of fraud. This is essentially the same as Ioffe's
final argument that effective prevention of odometer fraud will be furthered by
creation of a private right of action for all fraudulent failures to provide the
title for inspection before sale. Whether or not this is true, there is no
indication in the Act that Congress intended to federalize this multitude of
vehicle sales fraud claims that are unrelated to mileage. We may not consider
the benefits of what Ioffe believes would be a more effective preventative
scheme than the one chosen by Congress.
[40] III. Conclusion
[41] The Odometer Act creates a private right of action for violations of 49
C.F.R. § 580.5(c) only where a transferor chose not to disclose a vehicle's
mileage to the transferee in writing on the title with intent to defraud as to
the vehicle's mileage. We are not persuaded by Ioffe's arguments that the right
extends to situations, as in this case, where the transferor intended to, and
did, accurately disclose the vehicle's mileage. Accordingly, we AFFIRM the
district court's grant of summary judgment in favor of Sherman Dodge.
Opinion Footnotes
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odometer case, automobile, federal odometer law, odometer fraud, fraud
lawyer, odometer rollback claim, consumer fraud, deception, odometer law,
odometer rollback claim,
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[42] *fn1 NHTSA is part of the Department of Transportation and its
administrator reports directly to the Secretary of Transportation. See 49 C.F.R.
§ 1.3(b)(4).