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CarMax lawsuit given green light

A manufacturer who does not meet their contract responsibilities can harm consumers and face civil litigation. In a case that may have an impact across the nation, a California appellate court ruled earlier this year that a woman can sue CarMax for the sale of a car with an unfixed safety recall.

The plaintiff charged that CarMax sold her a 2008 Hyundai Elantra in 2013, but did not tell her that there was a manufacturer's recall for the stop lamp switch. This device turns on a light when the break is pressed. In 2013, thousands of Elantras were recalled for this defect.

A California trial court ruled in CarMax's favor and dismissed the lawsuit in January of 2016. It held that the complaint did not contain sufficient alleged facts for breach of contract, breach of warranty and misrepresentation that was not fixed or limited by the express warranty. The plaintiff, with the help of the Consumers for Auto Reliability and Safety, appealed.

The appellate court reversed this ruling and reinstated the lawsuit. The appeals court ruled that CarMax did not provide full disclosure and dealers cannot sell recalled vehicles without disclosing recalls, according to the Consumers for Auto Reliability and Safety. The consumer group also interpreted the opinion as ruling that the cars did not comply with the implied warranty that the car was merchantable under two state laws.

This ruling, if it withstands an appeal, could affect lawsuits in other states that have consumer protection laws like California. It could also make CarMax liable in cases where it does not disclose safety recalls when selling preowned cars.

CarMax issued a statement that it leads the industry with providing transparency with recalls and sharing this information to consumers. It said that it complies with the court's ruling that dealers disclose open recalls when it is aware of them.

CarMax may appeal the ruling to the state Supreme court. The appellate court decision is not a finding of legal liability and allows the lawsuit to proceed to a trial.

Source: Richmond Times Dispatch, "California case questions CarMax's policy on informing consumers about recalls," Tammie Smith, Feb. 27, 2018

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