Justice is Coming — Will You Be Ready?

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Justice is Coming — Will You Be Ready?

by Steve Levine Ignite Consulting Partners

The Covid-19 pandemic has presented many obstacles for the used car dealers that make up the readership of this publication, and I fear that there is another challenge still to come. Much like Wyatt Earp bringing vengeance at the conclusion of the movie Tombstone, there will be lots of consumer lawsuits and they will bring havoc and chaos to those that didn’t have the foresight to prepare.

Justice Delayed is Justice Denied — For Now

“Justice delayed is justice denied” is a legal adage that means that if legal relief or access to the courts is not available in a timely fashion, it’s the same as if there is no remedy at all. The pandemic crisis has had a significant impact on the ability to access the courts. Most courts in our state have been shut down or have drastically limited live proceedings and administrative personnel have not

been able to come to work, which resulted in new cases not being filed and old cases sitting stagnant.

This presented two unique challenges for the auto finance industry. First, these delays caused commonly sought remedies like judicial repossessions and pursuit of deficiency balances to be put on hold. This is critical, because sometimes judicial foreclosure of a vehicle is the only way a lienholder can regain possession. It’s virtually unprecedented that these remedies were unavailable for a few months. Even though courts and administrative offices are beginning to reopen, the backlog of work for court personnel, process servers, sheriff ’s departments, bond companies, as well as an anticipated flood of new filings will be sure to create delays and drag on proceedings.

The second challenge, which will be a drastic increase in consumer claims and other litigation, is still developing. While many creditors have taken the Office of Consumer Credit Commissioner urgings for restraint to heart, and

the government unemployment stimulus has helped consumers meet their financial obligations in the short term, there are still lots of people dealing with job loss or reduced earnings, and that will eventually create tensions that will lead to more lawsuits

Plaintiffs’ Lawyers Won’t Pass Up a Crisis

Once the courts are fully operational again, I anticipate a wave of claims. I’ve never known consumer lawyers to pass up an opportunity to make money, and I’m afraid this crisis will result in another payday for them. Actions like repossessions from an area under “stay at home orders” seem to be of interest to them, as do aggressive collection efforts that took place in the midst of massive layoffs and emergency declarations and still continue. I believe there will be some egregious examples of collection behavior that will be publicized as the result of lawsuits and these will create a wave of bad publicity and that will result in claims for the need for more regulation and punishment.

Many companies have been forced to change the way they handle vehicle sales and otherwise do business, such as home deliveries and new methods of contracting, and in their haste to get back to business some didn’t dot the “i’s” and cross the “t’s” when it came to due diligence of their new process. You can bet there are some hungry plaintiffs’ lawyers out there looking to profit and will find these cases. If you haven’t done so already, put your new process through a compliance and legal review.

I anticipate a dramatic number of employment related lawsuits for actions taken during the crisis. The new Families First Coronavirus Relief Act is a complex statute and many small businesses had to learn it “on the fly.” The handling of sick leave requests, decisions about furloughs and layoffs, the Family Medical Leave Act and OSHA laws, as well as the handling of the return to work, will all be fair game, as will claims based on a theory of an unsafe work environment. Dealers should have subject matter experts on speed dial. If you haven’t done so already, it’s time to update your Employee Handbook and policies.

Manage Customer Complaints Before they Become Lawsuits

Now is the time to have a strong complaint handling process. Train your employees about the dangers lurking around the corner and encourage flexible thinking and creative solutions. I know of one dealer that recently invited the scrutiny of the OCCC by fighting with a customer over a paltry sum when good customer service could have resolved the issue. The complaints of today are the lawsuits and regulatory actions of tomorrow.

Speaking of Tomorrow — Prepare for the Juror of Tomorrow

It’s important for creditors to keep in mind that the jurors of tomorrow will have lived through this

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I anticipate a dramatic number of employment related lawsuits for actions taken during the crisis. The new Families First Coronavirus Relief Act is a complex statute and many small businesses had to learn it “on the fly.”

crisis. Generally, jurors already tend to lean in a consumer’s favor because they can relate to the position of the consumer and they are consumers themselves. As a result of this crisis, though, I think that bond will be even strengthened, and jurors will be asking themselves whether the company’s behavior was proper given the enormity of the situation, namely a never experienced before pandemic. You want to be on the right side of that analysis, and your ability to claim that ground will depend on your willingness to put forth the effort to be “a good corporate citizen.”

Conclusions

The Covid-19 crisis has and will continue to have an impact on our justice system. The changes we face will be with us for quite a while, deep into 2021 is my best guess, and those expecting “business as usual” are in for a rude awakening. Take this opportunity to strengthen your position with strong training and process management.

Steve Levine is an attorney with 30 years of experience protecting car dealers and finance companies. Follow him on Twitter @LawyerLevine.

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Attorney Michael W. Dunagan is the author of the two must-have books for every Buy-Here, Pay-Here dealer in Texas. Mr. Dunagan has been General Counsel to TIADA for over 40 years. His law firm specializes in the representation of independent Texas car dealers.

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