Auto Dealers Steer Support To Crist

[Doc]

Published: Feb 16, 2006
http://www.tbo.com/news/politics/MGBOV23KQJE.html

TAMPA - Stung by multimillion-dollar fines and refunds for unfair sales practices, car dealers from two national chains are putting tens of thousands of dollars into Charlie Crist's campaign for governor.

At the same time, auto dealers here and nationwide have been seeking relief from regulatory laws that led to the investigations into those practices.

For at least the past two years, auto dealers have unsuccessfully sought legislation to exempt or protect themselves from major provisions of the Florida Deceptive and Unfair Trade Practices Act. Similar legislation has been filed for the coming session.

A spokesman for Crist, who as Florida attorney general is responsible for enforcing the key laws involved, said he hasn't taken sides on that legislation.

According to an analysis by The Tampa Tribune, Crist has received more than 460 contributions from individuals and companies involved in the automotive industry, totaling $226,537.

The vast majority were from dealerships or their executives, and all but a handful were for the maximum allowed amount of $500.

Car dealers also have contributed to Gallagher and the two leading Democrats in the race, Jim Davis and Rod Smith, but in far smaller amounts.

According to the Tribune's analysis, Gallagher received $38,400, Davis $6,000 and Smith $4,900. As with Crist, those totals include a few donations from automotive businesses other than car sales, but the vast majority are from car dealers.
Dealerships Were Investigated

Two chains affected by investigations have contributed heavily to Crist - Fort Lauderdale-based AutoNation, the nation's largest chain with around 350 franchises dealerships in 17 states, and Charlotte, N.C.-based Sonic Automotive Inc., which owns 182 dealerships in 15 states.

Dealers from both chains, one in California and one in Florida, were investigated recently for "loan packing" or "payment packing" - adding on fees and charges for such services as maintenance contracts, antitheft etching and collision insurance that car buyers customers sometimes don't realize they're paying.

Five years ago, an investigation by the Los Angeles district attorney and the California Department of Motor Vehicles led to criminal convictions for eight executives of an AutoNation dealership there, plus some $2.7 million in fines and refunds to car buyers.

In 2004, an investigation by the Florida Attorney General's Office and Department of Financial Services led to $1.7 million in refunds and $65,000 in litigation fees charged to two Sonic-owned dealerships in Clearwater.

Sonic has 16 Florida dealerships, and AutoNation has 70, including 18 in the Tampa Bay area, according to their Internet sites.

California, site of the 2000 investigation of an AutoNation dealer, also produced dozens of contributions for Crist - at least 53 $500 contributions from AutoNation dealerships there, according to the Tribune analysis.

Both Crist, the state attorney general, and his chief opponent in the Republican primary for governor, Tom Gallagher, state chief financial officer, were involved in the Clearwater probe. It began under Crist's predecessor as attorney general, Democrat Bob Butterworth.
Inquiry Closed After Crist Sworn In

Soon after Crist took office in the beginning of 2003, the attorney general's investigation was settled with the dealerships required to pay about $65,000 in attorney's fees and costs. No criminal charges were pursued.

Attorney general's office spokeswoman JoAnn Carrin said state financial regulators pursued the investigation because some of the services sold, such as maintenance contracts and extended warranties, are forms of insurance.

Nick Cox, an economic crimes investigator who was involved in the investigation under Butterworth, said the change in attorneys general was not the reason the investigation was closed. Cox said his office "began yielding the investigation to DFS [Department of Financial Services] before Butterworth left office."

Carrin said her office's settlement included the stipulation that the dealerships would comply with the requirements of a settlement with the Department of Financial Services.

That department, under Gallagher, ultimately reached a settlement requiring the $1.7 million refunds paid to about 1,200 customers.

Critics, however, said hundreds or thousands more customers could have been eligible. A private, class-action lawsuit seeking further refunds was unsuccessful.

California Donors, Florida Race

AutoNation includes a number of regional brands, such as AutoWay dealerships in the Tampa Bay area, Maroone dealerships in South Florida, and AutoWest and Power dealerships in California.

The company was founded in the 1990s by Fort Lauderdale business magnate Wayne Huizenga, long active in Florida politics. He was a major supporter of Gov. Jeb Bush, for example, and made his private jet available for Bush during his 2002 re-election campaign.

Huizenga, though he remains a large shareholder, has retired from the company and was not involved in deciding on the contributions, said AutoNation Vice President Mark Cannon.

Several of the California dealerships didn't respond to phone calls asking why they would contribute to a Florida race.

"It's pretty simple," Cannon answered. "Our company feels that Charlie Crist has been an outstanding attorney general, and will be an outstanding governor. We've asked our entities to contribute, and our entities have responded."

"I don't think we asked them all to," he said. "It was people who were politically interested, were interested in Florida."

Cannon said the company also supported Arnold Schwarzenegger, who became governor of California after the recall of Gov. Gray Davis, under whose administration the Los Angeles investigation took place. Among Schwarzenegger's first actions as governor were to eliminate a tax on car sales and replace the Department of Motor Vehicles head.
A Variety Of Donors

Though Crist's auto dealer contributions are far larger than those of his competitors, auto dealers trail real estate, development and lawyer interests on the list of contributors to the $6.9 million that the candidate has raised from sources other than the Republican Party.

Campaign spokeswoman Vivian Myrtetus noted that Crist has received more than 16,000 contributions from more than 40 states.

"We are fortunate to have strong support from a variety of industries including construction, health care and financial services as well as the automotive industry," she said. "We don't find the contributions from automobile dealers disproportionately higher than other industries."

If anything, Crist has appeared less sympathetic than Gallagher to the auto dealers' goals for less regulation of their sales practices.

Crist didn't take a stand on the 2004 or 2005 legislation that would have weakened or eliminated citizens' ability to sue car dealers under the Florida Deceptive and Unfair Trade Practices Act, or FDUTPA, according to Carrin and to an opponent of the measure - Gary Farmer, a Westin lawyer and board member of the Academy of Trial lawyers.

Gallagher has imposed limits on similar lawsuits, making it one of the main points of his campaign under the phrase "tort reform." Gallagher specifically favors tighter restrictions on class-action lawsuits, one of the chief consumer weapons against corporations suspected of cheating customers.

Crist says he favors tort reform but hasn't pushed the issue as hard as Gallagher. While in the attorney general's office, Crist has sought to make a name for himself as an advocate of strong consumer protections.
Are Dealers Seeking Insurance?

Changes that would, in effect, eliminate class-action lawsuits are the chief aim of the auto dealers, Farmer said. The legislation would do that by requiring that a car buyer give notice to a dealer and seek a negotiated refund before filing a lawsuit, he said.

The goal is simply "to make the dealer aware there's a problem and give him a chance to resolve it before there are a lot of attorney fees involved and a $2,500 problem becomes a $5,000 claim," said Ted Smith, president of the Florida Association of Automobile Dealers.

But Farmer said such a requirement would allow the dealer to settle with a single customer or a handful of customers, while avoiding refunds to hundreds or thousands of others.

The reason is that a class-action lawsuit must have a plaintiff who is a customer with an unsatisfied complaint - a "class representative." The notice requirement, he said, would allow the dealer to satisfy the complaint by a few customers, disqualifying them as representatives, while avoiding a class action that could force the dealer to notify and refund money to others who aren't aware they were cheated.

Either as governor or in his current job as attorney general, Crist's view of any legislation concerning FDUTPA could be decisive, because the state attorney general is charged with enforcing the law.

Farmer speculated that auto dealers may be worried by Crist's pro-consumer record as attorney general, and seeking insurance.

"One of the things big business does when they're concerned about a particular official is they show him some love," Farmer said. "Make sure they have access to him and tell him why they need help."