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Neese v. State

Supreme Court of Alaska

July 10, 2009

Jackie L. NEESE, individually and on behalf of all others similarly situated, Appellants,
v.
STATE of Alaska, and Lithia Chrysler Jeep of Anchorage, Inc., Lithia of Anchorage, Inc. d/b/a Lithia Dodge of South Anchorage, Lithia of Southcentral Alaska, Inc. d/b/a Chevrolet of Wasilla, Lithia Imports of Anchorage, Inc. d/b/a Lithia Hyundai of Anchorage, Appellees.

As Amended on Rehearing Nov. 20, 2009.

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[Copyrighted Material Omitted]

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Trena L. Heikes, Law Office of Trena L. Heikes, and Chris Bataille, Walther & Flanigan, Anchorage, for Appellants.

Clyde E. Sniffen, Jr., Senior Assistant Attorney General, Anchorage and Talis J. Colberg, Attorney General, Juneau, for Appellee State of Alaska.

Howard S. Trickey, Gary C. Sleeper, and Matthew Singer, Jermain Dunnagan & Owens, P.C., Anchorage, for Lithia Appellees.

Before : MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.

OPINION

CARPENETI, Justice.

I. INTRODUCTION

After an investigation into violations of state consumer protection laws, the state entered into a consent judgment with a large car sales company. A group of consumers who had purchased vehicles at the company's dealerships moved to intervene in the consent judgment proceeding, but the superior court denied intervention. The consumers appeal, arguing that the superior court erred by denying intervention as of right and abused its discretion by denying permissive intervention. Because the consumers have not met the requirements for intervention as of right or permissive intervention, we affirm the decision of the superior court.

II. FACTS AND PROCEEDINGS

This case involves the settlement of a consumer protection investigation by the state attorney general concerning violations of the Alaska Unfair Trade Practices and Consumer Protection Act by several of the Lithia auto dealerships in Alaska.

The state's inquiry into Lithia's practices began in July 2001 when Assistant Attorney General Clyde Sniffen sent a letter to the general manager of Lithia Chrysler Jeep of Anchorage. In this letter, Sniffen stated, " [w]e have ... taken the position that document preparation fees may be charged by a dealer, but these charges must be included in the advertised price for the vehicle. The only ‘ fees' that can be excluded from the advertised price are licensing and registration fees actually paid to a state agency." The attorney general did not pursue enforcement action after this letter was sent.

Four years later, in the course of an individual car purchaser's private action against Lithia for failure to disclose required information, counsel for the purchaser-who also represent the appellant used car purchasers in this case (consumers)-discovered numerous consumer complaints filed against Lithia

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with the Better Business Bureau. In July 2005, while the individual case was pending, consumers' counsel contacted Sniffen and advised him of evidence that Lithia had failed to inform a purchaser, as it was required to do by law, that the vehicle she was purchasing had previously been wrecked and repaired. In September 2005 consumers' counsel forwarded to Sniffen other consumer complaints against Lithia. The complaints attacked Lithia's failure to disclose information regarding vehicles sold to consumers in violation of AS 45.25.465 and its practice of charging consumers a $200 document preparation fee in violation of AS 45.25.440 and AS 45.25.460. In December 2005 consumers' counsel met with Sniffen and revealed their intent to file class action suits against Lithia on behalf of consumers injured by Lithia's illegal practices.

In January 2006 the consumers filed their class action complaint against Lithia alleging violations of the used vehicle disclosure provisions of AS 45.25.465 and AS 45.25.470. The complaint named eight individual plaintiffs who would serve as class representatives for all consumers who had purchased used vehicles from various Alaska Lithia dealerships since July 1, 2002.

While the consumers were preparing their class action, the attorney general was investigating Lithia's charging of document preparation fees and Lithia's failure to provide statutorily required disclosures to vehicle purchasers. After receiving numerous complaints about Lithia's actions, the attorney general served Lithia with a subpoena requesting information relating to used vehicle sales at the three largest Alaska Lithia dealers. Lithia responded by submitting numerous " deal files" containing purchase and sale documents for used vehicle sales.

As a result of its investigation and review of Lithia's " deal files," the attorney general entered into a consent agreement with Lithia on December 1, 2006. Pursuant to the agreement, the state filed a complaint against Lithia in the superior court seeking injunctive relief, civil penalties, and restitution and filed the consent judgment the same day.

The consent judgment was intended to resolve all the state's claims asserted in the complaint, and provide restitution and other relief to consumers who suffered damage as a result of Lithia's conduct. It includes injunctive relief mandating that Lithia not sell a used vehicle unless Lithia complies with the disclosure requirements of AS 45.25.465, and not sell a motor vehicle in violation of AS 45.25.440. The consent judgment also requires that Lithia not charge an administration fee, document preparation fee, or any other dealer fee unless the fee is included in the advertised price of the vehicle. In addition, the consent judgment assesses a $500,000 civil penalty against Lithia. It also requires Lithia to provide restitution to customers by refunding dealer fees charged in addition to the advertised price of vehicles sold. In addition to the refund of dealer fees, the consent judgment mandates that Lithia pay restitution to customers who can establish they have suffered an ascertainable loss of money or property as a result of Lithia's failure to comply with the disclosure requirements of AS 45.25.465 and AS 45.25.470.

Five days after the state filed the consent judgment, the consumers filed their second class action lawsuit based on various Lithia dealerships' practice of charging dealer fees not included in the advertised price of the vehicle in violation of AS 45.25.440.[1] On the same day, the consumers moved to intervene in the consent judgment proceeding.

The superior court denied the motion to intervene in February 2007. In its order, however, the court required the state and Lithia to create a modified consent judgment that included notice to Lithia customers and a right to opt out of the settlement. The court emphasized that customers who opt out of the consent judgment could pursue separate recovery and that the proposed intervenors could file an amicus brief to assist the court in reviewing the consent judgment.

The consumers appealed the superior court decision denying their motion to intervene. Nonetheless, they continued to participate

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in the superior court proceeding by filing an amicus brief regarding the merits of the consent judgment. After the state added the required opt out provision, the superior court approved the modified consent judgment in April 2007.

In May 2007 the consumers sent Lithia notice that they wished to opt out of the consent judgment. Nonetheless, the consumers continued to participate in the trial court proceeding by filing a motion to stay the enforcement of the consent judgment pending our decision in this appeal. In the meantime, however, Lithia and the state began the process of notifying consumers of the settlement terms and opportunity to opt out. They sent a notice of settlement to all consumers who had purchased a vehicle from an Alaska Lithia dealership since October 1, 2002.

The superior court denied the consumers' motion for a stay. The consumers then filed a motion for a stay with this court. We granted the motion and stayed the consent decree of the ...


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